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THE 
ECONOMICS  OF  COMMUNISM 

WITH     SPECIAL    REFERENCE     TO 

RUSSIA'S  EXPERIMENT 


THE  MACMILLANT  COMPANY 

NEW  YORK   ■    BOSTON   ■    CHICAGO 
DALLAS   •    ATLANTA    •    SAN  FRANCISCO 

MACMILLAN  &  CO..  Limited 

LONDON    •    BOMBAY    •    CALCUTTA 
MELBOURNE 

THE  MACMILLAN  CO.  OF  CANADA.  Ltd 

TORONTO 


THE 

^ECONOMICS  OF  COMMUNISM 

WITH    SPECIAL    BEFEEENCE    TO 

RUSSIA'S    EXPERIMENT 


BY 

LEO  PASVOLSKY 

FORMERLY  EDITOr'  OF  THE  "RUSSKOYE  SLOVO"  AND 
"THE   RUSSIAN   REVIEW" 


J15etai  gotk 

THE  MACMILLAN  COMPANY 
1921 

All   riijhts  reserved 


^ 


PRINTED    IN    THE    UNITED    STATES    OF    AMERICA 


^<1(,S.PS3 


Copyright,    1921, 
By   the   MACMILLAN  COMPANY 
Set   up   and   printed.     Published   July,    1921. 


ZO  5-1 


Press   of 
J.    Little  &    Ives   Company 
New    York,    U.    S.    A. 


PREFACE 

My  purpose  in  presenting  these  results  of  my  study 
of  the  Russian  experiment  in  the  economics  of  Com- 
munism is  not  to  show  that  this  experiment  has  reduced 
Russia  to  a  state  of  utter  economic  disorganization  and 
ruin.  This  fact  is  readily  apparent  from  the  general 
economic  infonnation  about  Soviet  Russia  and  is  will- 
ingly admitted  by  the  Soviet  leaders  themselves,  who 
even  claim  it  theoretically  as  an  inevitable  condition 
of  the  transitional  period.  Nor  is  it  my  purpose  to 
demonstrate  what  is  commonly  termed  the  failure  of  the 
Soviet  regime:  "failure"  and  "success"  when  applied 
to  huge  movements  are,  at  best,  relative  terms  and 
depend  on  the  standards  which  are  applied. 

My  interest  in  the  subject,  and  hence  my  purpose  in 
writing  this  book,  is  threefold : 

In  the  first  place,  the  Communist  regime  in  Russia 
in  its  economic  phases  interests  me  as  an  experiment. 
What  is  its  fundamental  theory  ?  What  does  it  aim  to 
do  ?  How  is  this  theory  applied  ?  Into  what  fonns 
does  it  translate  itself  ?  How  does  it  work  in  practical 
application,  i.e.,  what  are  some  of  the  important 
results  of  the  operation  of  these  forms  ? 

In  the  second  place,  the  regime  interests  me  from  the 
point  of  view  of  its  social-economic  class  ideas.  It  rests 
its  historic  case  upon  its  claim  to  being  a  "workman- 
peasant"  regime.     Does  it  represent  economically  the 


vi  PREFACE 

will  of  these  two  basic  groups  of  the  populatioii  of 
Russia  ?  Does  it  serve  their  interests  and  consequently 
satisfy  them? 

In  the  third  place,  the  regime  interests  me  as  the 
economic  system  which  Russia  has  had  for  upwards  of 
three  years.  As  such,  it  has  affected  profoundly  everv' 
phase  of  the  country's  life.  Can  it  continue  to  exist 
in  its  present  fonn  ?  And  if  not,  what  are  the  basic 
factors  of  Russia's  possible  economic  reconstruction 
under  another  regime  ? 

On  the  first  two  of  these  points  I  have  presented  as 
far  as  possible  information  drawn  from  official  Soviet 
sources.  The  statistics  I  have  quoted  may  not  be  accu- 
rate; but  if  that  is  so,  the  fault  rests  with  the  Soviet 
statisticians,  not  with  me.  What  I  have  attempted 
to  do  has  been  to  present  to  my  reader  a  systematized 
set  of  facts  on  the  various  phases  of  the  economic  situ- 
ation in  Soviet  Russia,  just  as  the  official  economic  pub-, 
lications  of  the  Soviet  regime  present  thesei  facts  to  their 
readers.  WTiile  I  realize  that  a  wholly  impersonal  atti- 
tude to  the  subject  is  impossible,  I  have  made  every 
effort  to  keep  my  personal  sympathies  and  antipathies 
out  of  the  exposition. 

On  the  third  point,  of  course,  I  am  thoroughly  sub- 
jective, and  for  that  reason  I  have  treated  it  in  the 
Conclusion,  where  I  have  indicated  in  bare  outlines 
some  of  its  salient  features. 

My  study  of  the  forms  and  the  results  of  the  Russian 
experiment  in  the  economics  of  Communism  is  by  no 
means  exhaustive;  it  was  not  intended  to  be  so.  What 
I  hoped  to  have  accomplished  was  to  give  a  picture, 
imperfect  and  incomplete  though  it  be,  of  the  manner 


PREFACE  vii 

in  which  the  experiment  has  worked  out  so  far,  and  in 
this  way  to  direct  attention  to  its  main  features  and  to 
its  implications  for  the  economic  future  of  Russia, 
which  are  so  often  overlooked  or  deliberately  pushed 
into  the  background  in  the  stress  of  political  controversy 
and  the  stonn  of  invective  on  both  sides. 

The  information  contained  in  this  book  on  the  re- 
sults and  problems  of  the  Russian  experiment  in  the 
economics  of  Communism  covers  the  period  from  the 
beginning  of  the  Revolution  to  the  end  of  the  second 
half  of  1920:  at  the  time  when  the  manuscript  was  pre- 
pared for  the  press,  official  data  were  available  only  for 
that  period.  Since  then,  however,  several  important 
events  took  place  in  Soviet  Russia,  having  considerable 
significance  from  the  viewpoint  of  the  economic  experi- 
ment. While  it  is  too  late  to  incorporate  information 
concerning  these  later  developments  in  the  main  body 
of  the  book,  I  should  like  to  say  a  few  words  here  con- 
cerning their  significance. 

As  will  be  readily  seen  from  the  material  in  this  book, 
the  Ninth  All-Russian  Congress  of  the  Communist 
Party,  held  in  April,  1920,  formulated  and  sanctioned 
the  system  of  the  application  of  force  in  the  industrial 
life  of  Soviet  Russia.  At  this  Congress,  the  Communist 
leaders  asserted  their  belief  that  Communism  cannot 
be  established  in  Russia  without  the  application  of  a 
system  of  economic  compulsion.  The  Eighth  Congress 
of  Soviets,  held  in  December,  1920,  reaffirmed  this 
policy  of  compulsion  and  extended  it  to  the  agricultural 
life  of  the  country.  Thus,  the  year  1920  ended  with 
the  policy  of  compulsion  as  the  outstanding  feature  of 


viii  PEEFACE 

the  whole  Russian  experiment  in  the  economics  of  Com- 
munism. 

But  the  year  1920  also  ended  with  an  almost  uni- 
versal realization,  even  on  the  part  of  the  Soviet  leader- 
ship, of  the  fact  that,  from  the  viewpoint  of  economic 
production,  the  situation  in  the  country  was  rapidly 
becoming  more  and  more  desperate.  Out  of  this  realiza- 
tion there  emerged  the  inevitable  envisagement  of  the 
fundamental  dilemma  which  the  leaders  of  Communism 
must  face  and  which  may  be  expressed  as  follows: 

Communism  is  impossible  luithout  the  application  of 
compulsion  in  the  economic  life  of  the  country;  but 
economic  production  is  impossible  with  the  application 
of  such  compulsion. 

During  the  year  1920,  the  Soviet  leaders  attempted 
to  break  this  dilemma,  without  solving  it,  and  the  re- 
sults of  this  process  have  been  truly  disastrous  for  every 
phase  of  Russia's  economic  life.  At  the  beginning  of 
1921,  some  of  these  leaders  began,  apparently,  to  change 
their  course,  and  this  change  found  its  expression  in  the 
Tenth  Congi-ess  of  the  Communist  Party,  held  in 
March,  1921. 

At  this  Congress,  Lenin  delivered  a  speech  which  has 
been  hailed  as  a  turning  point  in  the  policies  of  the 
Soviets,  while  the  Congress  itself  was  followed  by  three 
decrees  of  the  Soviet  Government,  embodying  some  of 
the  phases  of  this  change  of  attitude.  The  first  of  these 
decrees  substitutes  a  tax  in  kind  for  the  system  of 
government  requisitions  of  the  stocks  of  food  raised  by 
the  peasantry,  permitting  the  peasants  to  dispose  of 
their  surplus  stocks  of  foodstuffs  at  will.  The  second 
decree  makes  it  possible  for  workmen  at  different  in- 


PEEFACE  ix 

dustrial  enterprises  to  keep  for  themselves  a  certain 
part  of  the  manufactured  goods  produced  at  their  en- 
terprises and  exchange  them  with  the  peasants  for  food- 
stuffs. The  third  decree  extends  somewhat  the  local 
purchasing  and  selling  prerogatives  of  the  cooperative 
organizations,  making  it  possible  for  them  to  act  as  di- 
rect intermediaries  between  the  workmen  and  the  peas- 
ants. All  this  refers  to  operations  within  narrow  local 
limits  and  does  not  signify  an  establishment  of  freedom 
of  trade  on  a  national  scale. 

From  the  viewpoint  of  actual  economic  conditions, 
these  measures  merely  constitute  a  legalization  of  the 
practices  which  had  existed  long  before,  as.  the  reader 
will  readily  see  by  consulting  Chapters  III,  IV,  and 
V  of  Part  Two,  where  we  take  up  the  crude  and  primi- 
tive forms  of  barter  which  had  growm  up  on  a  vast  scale 
in  contravention  of  the  official  state  monopoly  of  dis- 
tribution. But  from  the  viewpoint  of  the  development 
of  the  experiment  in  the  economics  of  Communism, 
these  measures  are  very  significant.  They  represent  the 
first  official,  generalized  acknowledgment  of  the  break- 
ing down  of  the  state  monopoly  of  distribution,  the  con- 
trol over  which  constitues  admittedly  the  very  basis  of 
economic  compulsion.  Moreover,  they  indicate  that  the 
faith  of  the  Soviet  leadership  in  the  efficacy  of  such 
compulsion,  based  on  the  application  of  sheer  armed 
force,  has  been  definitely  shaken — at  least  for  the  time 
being. 

There  is  no  doubt  that  in  advocating  this  change  of 
policy  and  in  forcing  his  views  upon  the  Party  Con- 
gress, Lenin,  who  sponsors  the  change,  is  moved  by  con- 
siderations  of   pressing   expediency — under   the   influ- 


X  PEEFACE 

ence  of  such  potent  factors  as  an  acute  food  crisis,  the 
Kronstadt  rebellion,  and  wide-spread  peasant  uprisings. 
But  this  weakening  of  the  regime  of  economic  compul- 
sion is  regarded  with  gTcat  disquietude  by  some  of  the 
other  leaders.  Lenin  is  still  opposed  by  the  powerful 
Trotsky-Bukharin-Dzerzhinski  combination,  which  de- 
mands a  return  to  the  policy  of  compulsion  and  argues 
that  such  half-measures  as  those  which  are  being  intro- 
duced under  the  policy  sponsored  by  Lenin  will  have  no 
economic  efficacy,  but  are  more  likely  to  make  impera- 
tive further  concessions  in  the  same  direction,  result- 
ing ultimately  in  the  denationalization  of  industry  and 
the  reestablishment  of  freedom  of  trade  on  a  national 
scale,  i.  e.,  a  complete  return  to  capitalism. 

The  two  gi'oups  are  now  engaged  in  a  bitter  struggle 
within  the  Communist  ranks  themselves,  and  upon  the 
outcome  of  this  struggle  will  depend  the  next  step  in 
the  economic  activities  of  the  Soviet  regime,  viz.,  further 
weakening  or  renewed  stringency  of  economic  compul- 
sion. In  either  case,  the  crisis  indicated  by  this  contro- 
versy itself  appears  to  us  as  an  unmistakable  sign  of  the 
fact  that  tlie  Russian  experiment  in  the  economics  of 
Communism  is  rapidly  coming  to  an  end.  And  the  ma- 
terial gathered  in  this  book  presents  a  picture  of  the 
conditions  under  which  this  experiment  developed 
through  the  stages  which  had  finally  rbought  it  face  to 
face  with  its  fundamental  economic  dilemma :  Cotti- 
munism  or  Production? 

I  wish  to  express  my  gi-atitude  to  numerous  friends 
in  Europe  and  America  who  helped  me  in  the  gather- 
ing of  this  material  and  placed  at  my  disposal  many 


PREFACE  xi 

of  the  original  documents  quoted  and  translated  here. 
I  wish  especially  to  thank  Professor  Samuel  IST.  Harper 
of  the  University  of  Chicago,  whose  aid  in  the  study  and 
the  analysis  of  this  material  has  heen  of  very  great 
value  to  me. 

Leo  Pasvolsky. 
New  York,  May  1,  1921. 


FOREWORD 

It  is  undoubtedly  true  that  no  peace  that  is  real  will 
come  to  the  civilized  world,  until  Russia  finds  herself 
and  is  restored  alike  to  sanity  of  domestic  action  and 
to  the  place  in  the  sisterhood  of  nations  which  is  normal 
to  her  great  resources  and  to  the  energy  and  thrift  of 
her  vast  population. 

Her  present  alleged  rulers  admit  that  their  Com- 
munist regime  cannot  succeed  unless  it  spreads  to  other 
lands  and  becomes  a  world  movement.  They  have 
spared  neither  money  nor  effort  to  bring  other  countries 
into  the  fold  of  the  Third  International,  but  with 
scanty  success.  Indeed,  it  now  plainly  appears  that 
the  great  inert  majority  in  Russia  itself  opposes  the 
methods  of  Communism  as  well  as  its  theory,  and  that 
Lenin  and  his  fellows  control  Russia  only  so, far  as  they 
can  reach  with  their  army.  The  statement  that  their 
own  success  depends  on  the  support  of  other  nations 
is  equivalent  to  an  admission  of  that  failure  which  all 
the  world  outside  of  Russia — save  a  few  blind  advo- 
cates— clearly  sees. 

It  is  of  more  present  interest  and  future  value  to 
consider  how  and  when  the  real  Russia  will  assert  itself, 
and  what  may  then  be  done  by  us  in  her  behalf.  Her 
former  economic  organization  is  destroyed,  but  her  huge 
undeveloped  resources  remain,  and  she  still  has  latent 
the  power  to  feed  a  large  part  of  the  world.     It  will  be 


xiv  FOREWOED 

a  noble  task  when  the  hour  strikes  to  go  to  her  aid,  to 
lend  her  a  helping  hand,  to  lift  her  to  her  feet,  to  aid  her 
to  self-help,  to  serve  her  as  we  would  ourselves  in  like 
case  wish  to  be  served. 

Mr.  Pasvolsky  does  good  service  both  to  Russia  and 
the  world  in  throwing  full  light  upon  present  conditions 
in  that  troubled  land,  and  in  so  making  clear  alike  the 
difficulty  and  the  need  to  her  and  to  us  of  her  resurrec- 
tion. 

William  C.  Redfield. 
Former  Secretary  of  Commerce. 


TABLE  OF  CONTENTS 

PAGE 

Intboduction — The    Economic    Theoky    of    Com- 
munism      1 

PART  ONE 
THE  SOVIET  ECONOMIC  SYSTEM 

CHAPTER 

I.     The  Unified  Plan 21 

II.     Nationalized  Production 28 

1.  Labor  Control 28 

2.  Nationalization 36 

3.  The  Councils  of  National  Economy        ...  42 

III.     Cooperative  Distribution 48 

1.  The  Russian  Cooperative  Movement      ...  50 

2.  The    Reorganization    of    the    Consumers'    Co- 

operatives          52 

3.  The  Breaking-up   of   the   Credit-and-Loan    Co- 

operatives          56 

4.  The  Producers'   Cooperative    Organizations       .  59 

rV.    The  Agrarian  Scheme 64 

1.  Socialization  vs.  Individualism 65 

2.  Communism  in  Agriculture 71 

3.  The  Soviet  Estates 73 

4.  The  Rural  Communes 77 

5.  The  Agricultural  Associations 80 

PART  TWO 
THE  RESULTS  AND  THE  PROBLEMS 

I.     Transportation 87 

1.  The  Normal  Railroad  Situation        ....  87 

2.  The  Situation  by  the  End  of  1919         ...  90 

3.  The  Methods  of  Checking  the  Disorganization  96 

XV 


xvi  TABLE  OF  CONTENTS 

CHAPTER  PAQB 

4.  The  First  Half  of  1920 103 

5.  The  Rehabilitation  Plan Ill 

6.  The  Waterways 118 

7.  The  Transportation  Budget 126 

II.    Fuel  and  Raw  Materials 130 

1.  The  Normal  Fuel  Situation 130 

2.  During  the  War  and  the  Revolution     .      .      .  133 

3.  The  Fuel  Situation  in  1920 140 

4.  The  Raw  Materials 150 

III.  Labob 158 

1.  Labor  Shortage 158 

2.  Wages  and  Prices 163 

3.  Labor  Discipline 168 

4.  Production  and  the  Productivity  of  Labor        .  176 

5.  Premiums  and  Penalties 181 

6.  The  Militarization  of  Labor 188 

7.  Labor  Desertion .  194 

IV.  Management 200 

1.  Administration  by  Committees 202 

2.  "Glavkokratia":   Inefficiency  in  Production       .  207 

3.  "Spekulyatsia" :  Inefficiency  in  Distribution      .  211 

4.  Private  Initiative  in  Disguise 217 

5.  Financial  Chaos 223 

6.  Taking  over  the  Experience  of  the  Bourgeoisie.  230 

7.  Collegiate  or    Individual   Management?      .      .  234 
.     8.     Concentration  of  Effort 237 

V.     Agrictxltuke  and  the  Peasantry 241 

1.  The  Peasants  and  the  Land 242 

2.  The  Food  Crisis 246 

3.  Class  War  in  the  Villages 253 

4.  The  Middle  Peasantry 261 

5.  The  Village  against  the  City 266 

6.  The  Basic  Paradox 273 

7.  War  against  the  Peasantry 279 

Conclusion — Summary  of  the  Situation  by  the 

End   of    1020 285 

appendix 

I.     List  of  Unfamiliar  Terms 309 

II.     Equivalents  of  Weights  and  Meiasubes      .  312 


The 
Economics  of  Communism 

INTRODUCTION 

THE    ECONOMIC    THEORY    OF    COMMUNISM 

The  theoretical  basis  of  Communisin,  as  far  as  actual 
statements  of  theory  are  concerned,  is  very  limited.  In 
its  most  general  aspects,  of  course,  Communism  ia 
founded  upon  the  Marxian  analysis,  or,  to  be  exact, 
upon  Lenin's  interpretation  of  the  writings  of  Karl 
Marx  and  Friedrich  Engels.  But  this  foundation  is 
much  too  general  to  be  sufficient  for  the  manifold  ramifi- 
cations of  the  experiment  in  Communism  that  is  being 
made  in  Russia.  Additions  to  it  and,  sometimes,  detrac- 
tions from  it,  are  made  by  current  writers  on  Commu- 
nism in  order  to  make  it  fit  the  conditions  as  they  have 
unfolded  themselves. 

This  sketch  is  an  attempt  to  systematize  in  sheer  out- 
lines the  theory  of  Communism  which  is  being  used  by 
the  Soviet  leaders,  particularly  in  the  domain  of  eco- 
nomics, as  a  basis  for  the  policies  which  they  lay  down 
and  the  institutions  they  build  up,  both  through  their 
experiment  in  Russia  and  through  their  attempt  to 
extend  this  experiment  on  a  world-wide  scale  by  means 
of  the  Third  or  Communist  International. 

1 


2  INTEODUCTION 

1.   The  State  and  the  Classes 

Lenin's  interpretation  of  the  Marxian  analysis  is 
given  in  his  book,  "The  State  and  the  Revolution," 
written  on  the  eve  of  the  overturn  of  the  Provisional 
Government.*  It  begins  with  two  fundamental  enti- 
ties, the  state  and  the  classes,  and  gives,  first  of  all, 
the  Communist  views  on  the  relation  between  the  two. 
According  to  these  views,  the  state  is  "the  product  and 
the  manifestation  of  the  irreconcilability  of  class  con- 
tradictions." The  state  comes  into  existence  when  and 
where  class  contradictions  cannot  be  reconciled.  And 
conversely,  the  existence  of  the  state  is  the  proof  of  the 
fact  that  class  contradictions  are  irreconcilable.  More- 
over, the  state  would  never  have  been  able  to  come  into 
existence,  if  class  contradictions  could  be  reconciled. 

Actively,  the  state  is  an  attempt  to  moderate  the 
acuteness  of  class  contradictions.  It  achieves  this  by 
being  an  organ  of  class  domination,  an  instrument  of 
oppression  of  one  class  by  another.  In  this  way  it 
becomes  a  force,  placed  above  society,  and  striving  con- 
stantly "to  alienate  itself  from  society  as  a  whole." 
Its  means  are  those  of  compulsion.  Its  weapons  are 
the  army,  the  police,  the  prisons,  etc.  In  conditions 
of  capitalistic  society,  the  state  is  an  expression  of  the 
system  of  economic  exploitation  of  the  oppressed  class 
by  the  ruling  class. 

Since,  according  to  the  Marxian  analysis,  the  trend 
of  economic  development  is  irresistibly  in  the  direction 

*  We  are  using  here  the  Russian  edition  of  this  book,  published  In 
New  York  by  the   Russian    Socialist   Federation   in    1919. 


INTRODUCTION  3 

of  such  an  organization  of  society  in  which  the  division 
into  classes  will  be  inevitably  abolished  and  the  classes 
as  such  will  cease  to  exist,  the  state  itself,  being  a 
product  of  class  division,  is  bound  to  become  superflu- 
ous. It  was  Engels  who  developed  this  idea  of  the 
"dying-off"  of  the  state  in  the  process  of  the  economic 
reorganization  of  society,  and  Lenin's  opponents  use 
this  as  an  argument  against  the  methods  of  Communism 
as  they  are  being  applied  in  Russia,  interpreting  Engels' 
idea  as  signifying  a  process  of  social  evolution.  Lenin, 
however,  interprets  Engels  differently.  He  considers 
that  the  idea  of  an  evolutionary  disappearance  of  the 
state  refers  to  a  stage  in  the  process  of  the  social  revo- 
lution, specifically,  to  its  second  stage,  while  the  first 
stage  calls  for  different  methods. 

What  takes  place  in  the  course  of  the  social  revolu- 
tion, according  to  Lenin,  is  this :  first,  the  capitalistic 
state  is  destroyed  by  means  of  a  violent  revolution,  and 
its  place  is  taken  by  a  proletarian  state,  built  objectively 
along  the  same  lines ;  and  second,  this  proletarian  state 
gradually  disappears,  "dies  off,"  and  the  system  of 
Communism  proper  is  established.  In  the  course  of 
the  process  the  whole  economic  basis  of  social  life  under- 
goes a  vital  and  radical  transformation,  and  the  state, 
which  is  the  manifestation  of  one  of  its  phases,  also 
undergoes  a  metamorphosis. 

This  is  the  theoretical  basis  of  the  violent  revolution 
which  Russian  Communism  uses  as  the  foundation  of 
its  whole  method,  and  which  is  so  vehemently  rejected 
by  an  overwhelming  majority  of  the  other  Socialistic 
groups. 


INTEODUCTION 


2.   Socialism  and  Communism 

Thus,  tliere  are  two  stages  in  the  establishment  of 
Communism;  the  first  is  what  is  commonly  termed 
Socialism,  the  second  is  what  is  known  as  Communism 
proper.  Lenin,  both  through  his  own  preference  and 
on  the  authority  of  Marx,  uses  a  different  terminology : 
the  first  stage  he  calls,  "the  first  or  the  lower  phase 
of  Communistic  society" ;  the  second  he  calls,  "the 
higher  phase  of  Communistic  society."  What  are  the 
disting-uishing  characteristics  of  the  two  phases? 

Quoting  Marx,  Lenin  characterizes  the  first  phase  as 
"having  developed  not  on  its  own  foundation,  but  grown 
out  of  the  capitalistic  society,  and  therefore  preserving 
in  respect  to  its  economic,  moral  and  mental  character- 
istics the  impression  of  the  old  society."  What  does 
this  mean  ?  Private  property  has  been  abolished.  All 
the  means  of  production  and  distribution  are  in  the 
hands  of  the  proletarian  state.  Every  member  of 
society,  performing  some  useful  work,  receives  a  cer- 
tificate to  that  efi^ect,  which  entitles  him  to  an  amount 
of  goods  out  of  state  warehouses,  corresponding  roughly 
to  the  amount  of  his  production,  less  the  amounts  which 
are  necessary  for  contribution  to  the  common  fund  for 
the  whole  of  society. 

In  this  manner  the  first  phase  of  Communism  pro- 
vides mechanical  equality  of  distribution.  But  this 
equality  is  not  true  equality.  On  the  contrary,  it  pre- 
supposes inequality,  for  persons  doing  actually  unequal 
amounts  of  work  receive  equal  amounts  of  products. 
In  this  way,  the  "equal  right"  of  the  first  phase  of 


INTEODUCTION  5 

CoTnimmism  is  really  the  remains  of  the  bourgeois 
system. 

Again  quoting  Marx,  Lenin  characterizes  the  second 
phase  of  Communism  as  the  time  when  "the  difference 
in  the  attitude  toward  mental  and  physical  labor  will 
disappear;  when  labor  will  become  no  longer  a  means 
to  life  but  will  become  the  first  necessity  of  life ;  when 
together  with  the  all-sided  development  of  the  indi- 
vidual, the  social  productive  forces  will  develop  and  the 
sources  of  social  wealth  will  give  their  full  product; 
when  it  will  become  possible  to  overstep  the  narrow 
horizon  of  the  'bourgeois  right'  and  to  promulgate  the 
principle,  'From  each  individual  in  accordance  with 
his  abilities;  to  each  in  accordance  with  his  needs.'  " 

The  first  phase  of  Communism,  then,  the  period  fol- 
lowing the  overthrow  by  violence  of  the  bourgeois  state 
and  the  establishment  of  a  proletarian  state,  continues 
to  be  a  period  of  compulsion.  Using  the  modified  form 
of  the  bourgeois  system  of  distribution,  establishing  cer- 
tain norms  of  reward  for  labor,  it  must  have  an  appara- 
tus for  the  enforcement  of  these  norms.  It  preserves 
"a  bourgeois  state,  but  without  the  bourgeoisie."  The 
classes  have  not  as  yet  been  wiped  out  entirely.  The 
state  is  still  the  expression  of  the  rule  of  one  class  over 
another.  But  now  the  ruling  class  is  the  proletariat. 
The  state  is  now  the  expression  of  the  dictatorship  of 
the  proletariat. 

Under  Socialism,  or  the  first  phase  of  Communism, 
society  becomes  one  huge  economic  organization,  con- 
trolled by  the  state.  All  the  individuals  constitut- 
ing society  become  the  employees  of  this  state  syndicate. 


6  INTRODUCTION 

Discipline  of  tlie  strictest  nature  is  established.  The 
work  of  each  individual  is  controlled  so  that  he  would 
get  in  reward  exactly  what  he  produces.  This  "factory" 
discipline  would  exist  until  all  individuals  in  society, 
or  at  least  the  majority  of  them,  would  learn  to  produce 
of  their  own  accord  as  much  as  they  are  capable  of  pro- 
ducing. Compulsion  and  state  control  are  expected  to 
inculcate  these  habits  of  voluntary  maximum  production 
in  every  member  of  society,  and  particularly,  in  the 
"capitalists — the  individuals  who  still  retain  their 
capitalistic  ideas  and  habits — and  in  the  workmen  who 
had  become  corrupted  by  capitalism."  When  compul- 
sion and  control  will  have  done  their  work  and  these 
new  habits  will  have  become  firmly  implanted,  then 
both  of  these  weapons  will  become  unnecessary,  and  the 
proletarian  state  itself,  as  an  instrument  of  compul- 
sion, will  become  superfluous.  It  will  disappear  gradu- 
ally, and  humanity  will  emerge  from  the  lower  phase  of 
Communism  into  the  higher.  At  this  point  the  general 
aspects  of  the  theoretical  analysis  of  Communism,  as 
it  underlies  the  Russian  experiment,  really  end,  and  the 
more  specialized  aspects  of  it  begin. 

The  writers  on  Communist  theory  are  very  fond  of 
using  Hegel's  famous  aphorism,  "The  owls  of  Minerva 
begin  to  fly  about  only  with  the  nightfall."  In  other 
words,  theories  shape  themselves  to  a  large  extent  in 
the  process  of  application.  The  salient  features  of  the 
Communist  theory  which  we  have  sketched  so  far  on 
the  basis  of  Lenin's  book,  represent  the  deductive 
foundation  of  the  theory  as  it  is  being  applied.  Now 
begins  the  inductive  part. 


INTEODUCTION  7 

3.    The  Collapse  of  Capitalism 

The  only  work  that  has  appeared  so  far  on  the  theory 
of  the  collapse  of  capitalism  through  its  violent  over- 
throw by  a  social  revolution  is  a  recent  book  entitled: 
''The  Economics  of  the  Transitional  Period :  the 
General  Theory  of  the  Transitional  Process,"  *  by 
Nicholas  Bukharin — the  most  prolific  Communist 
writer  on  questions  of  theory.  In  this  book  we  have 
what  another  Communist  writer  has  called  "the  alge- 
braic formulae  of  the  social  revolution." 

The  outstanding  consequence  of  the  world  war  has 
been  the  production  of  a  profound  economic  crisis  all 
over  the  world  and  the  menace  of  a  social  revolution  in 
every  country  affected  by  this  crisis.  Bukharin  con- 
siders that  the  word  "crisis"  which  is  used  widely  to 
describe  this  condition  of  the  world  is  not  correct. 
What  has  happened  really  is  a  catastrophe,  which  is 
bound  to  prove  fatal  for  the  whole  system  of  capitalism. 
It  is  the  beginning  of  that  collapse  of  capitalism  which 
is  foretold  as  inevitable  by  the  Marxian  analysis. 

What  were  the  factors  that  brought  on  this  catastro- 
phe, and  what  are  its  implications  from  the  point  of 
view  of  the  theory  of  Communism  ?  The  answer  to 
these  questions  Bukharin  finds  in  the  "structure  of  the 
world  capitalism  before  the  war"  and  in  the  effects 
which  the  war  has  had  upon  certain  vital  characteristics 
of  the  capitalistic  system. 

•  The  full  text  of  Bukharin's  book  Is,  unfortunately,  unavailable  in  this 
country.  We  are  using  as  the  basis  of  this  part  of  our  work  a  long 
review  of  the  book,  containing  copious  quotations,  by  C.  V.  Chlenov 
in  Ekonomicheskaya  Zhisn  (The  Economic  Life),  an  official  Moscow 
publication,  July  17,  1920. 


8  INTEODUCTION 

The  general  trend  of  economic  development  before 
the  war  was  to  bring  the  whole  world  together  into  a 
single  economic  system.  This  was  made  possible,  theo- 
retically, by  the  conditions  which  attended  the  division 
of  labor  and  by  the  institution  of  exchange  of  goods. 
This  world  system  consisted  of  separate  economic  units, 
each  one  organized  internally,  but  competing  among 
themselves.  Thus  the  whole  system  was  an  ''anarchic" 
one,  without,  on  a  large  scale,  unified  and  organized 
leadership.  Its  strongly  marked  tendency,  however,  was 
toward  internal  concentration  within  the  boundaries  of 
separate  states.  The  development  of  financial  capital 
was  in  the  direction  of  destroying  competition  and  con- 
sequently, "anarchy."  But,  as  this  internal  competition 
within  states  with  a  large  degree  of  capitalistic  develop- 
ment was  giving  way  to  comparatively  complete  unity, 
each  state  merging  more  or  less  into  an  economic  com- 
plex, there  began  to  emerge  a  similar  rivalry  on  a  world 
scale  among  these  economic  state-complexes.  In  this 
world-wide  competition,  the  contradictions,  inherent  in 
capitalism,  found  their  maximum  development,  and 
took  the  form  of  the  system  of  imperialism.*  Outstep- 
ping national  boundaries,  capitalism  preserved  its  basic 
"anarchic"  characteristics. 

The  world  war  has  had  a  tremendous  influence  upon 
the  character  of  the  whole  capitalistic  system.  It  called 
for  greatly  increased  internal  organization  and  concen- 
tration of  economic  functions  within  the  state- 
complexes.     As  a  result  there  has  grown  up  in  all  the 

•  The  development  of  economic  imperialism  as  the  outstanding  feature 
of  the  world  economic  situation  is  taken  up  at  great  length  in  Lenin's 
principal  speech  at  the  2nd  Congress  of  the  Third  International. 


INTEODUCTION  9 

economically  developed  countries  of  the  world  what 
Bukharin  terms  ''state-capitalism,"  The  state  has  now 
become  the  controlling  factor  in  economic  production. 
But  the  state  itself  is  an  instrument  in  the  hands  of 
the  ruling  class.  Thus,  the  concentration  which  has 
taken  the  form  of  state-capitalism  and  which  has  intro- 
duced new  factors  into  the  system  of  world  imperial- 
ism, is,  in  reality,  the  highest  development  of  financial 
capitalism.  Bukharin  characterizes  this  process  as 
follows : 

The  reorganization  of  the  productive  relationships  of 
financial  capitalism  (due  to  the  creation  of  state  capitalism. 
— L.  P.)  follows  the  road  of  a  world-wide  state-capitalistic 
organization;  a  transformation  of  money  into  a  unit  of  ac- 
countancy; organization  of  production  on  a  national  scale; 
and  the  subjection  of  the  whole  international  economic 
mechanism  to  the  aims  of  the  world  competition. 

But  the  war  has  had  another  effect  that  is  far-reaching 
and  vitally  important.  In  order  to  carry  on  the  war 
and  really  create  the  system  of  state-capitalism,  the 
bourgeois  governments  have  found  it  necessary  to  sub- 
ordinate to  themselves  the  class  organizations,  both  of 
the  bourgeois  and  of  the  proletarian  classes.  And  this 
subordination,  as  far  as  the  proletarian  class  organiza- 
tions are  concerned,  has  resulted  in  setting  into  motion 
within  them  strong  currents,  which,  in  turn,  serve  to 
accentuate  and  render  more  acute  the  principal  factors 
of  class  antagonism. 

Moreover,  the  world  war  has  played  havoc  with  all 
the  factors  determining  the  productive  forces  of  the 
countries  concerned.     The  immediate  outcome  of  the 


10  INTEODUCTION 

war  has  been  a  contraction  of  production,  which,  in  turn, 
has  resulted  in  a  contraction  of  consumption,  and  the 
consequent  further  impairment  of  labor,  as  an  all- 
important  factor  in  the  determination  of  the  productive 
forces.  All  this  inevitably  operates  toward  disinte- 
grating the  productive  relationships  of  society,  i.  e., 
the  relations  among  the  various  factors  that  determine 
production,  which  constituted  formerly  the  basis  of  the 
whole  economic  system  of  capitalism.  This  disinte^ 
gration  exhibits  itself,  first  in  all  forms  of  impairment 
of  labor  discipline,  and  finally  in  a  revolutionary  break- 
down, i.  e.,  refusal  on  the  part  of  labor  to  obey  the 
capitalistic  class.  And  this  can  result  only  in  a  catas- 
trophe, which  must  cause  the  collapse  of  capitalism. 

The  implication  of  this  part  of  the  economic  theory 
of  Communism,  as  presented  by  Bukharin,  is  that  the 
moment  of  such  a  collapse  has  arrived.  On  the  basis 
of  the  Communist  analysis  of  the  world  economic  situa- 
tion, this  theoiy  states  that  "the  period  of  the  breakdown 
has  set  in  definitely,  and  there  are  no  symptoms  of  a 
regeneration  of  the  old  system  of  productive  relation- 
ships." 

Jf.    The  Economic  Dictatorship  of  the  Proletariat 

The  collapse  of  capitalism  must  be  followed  by  a 
period  of  transition  to  the  first  phase  of  Communism. 
The  form  of  this  period  of  transition  is,  basically,  the 
economic  dictatorship  of  the  proletariat. 

Bukharin  makes  a  point  in  this  connection  which  is 
considered  a  contribution  to  the  economic  theory  of 
Communism.     He  asserts  that,  just  as  it  is  impossible 


INTEODUCTION  11 

to  establish  a  proletarian  state  without  first  overthrow- 
ing by  force  the  bourgeois  state,  so  it  is  impossible  "to 
conquer  in  its  entirety  the  economic  apparatus  of  soci- 
ety." This  apparatus  must  be  broken  up,  and  "disinte- 
gration and  productive  anarchy  are  the  inevitable  stages 
through  which  we  must  pass." 

This  follows  logically  from  the  whole  theory  of  the 
collapse  of  capitalism.  We  have  already  seen  that, 
according  to  the  theory,  this  collapse  must  be  cataclys- 
mic and  must  find  expression  in  the  breaking  down  of 
productive  relationships.  But  production,  which  is  the 
basis  of  human  life,  is  possible  only  if  the  various  fac- 
tors in  production  cooperate  for  a  definite  end.  Once 
this  cooperative  relation  is  broken,  production  becomes 
no  longer  possible.  The  most  important  cause  of  the 
collapse  of  capitalism  is  the  refusal  on  the  part  of  labor 
to  continue  to  produce.  According  to  the  Communist 
theory,  this  is  the  revolutionary  and  the  only  way  to 
eifect  the  transition  from  the  capitalistic  to  the  com- 
munistic economic  order.  And  this  is,  of  course,  noth- 
ing else  than  the  break-up  of  the  existing  economic 
apparatus  of  society.  The  period  of  the  break-up  must, 
obviously,  be  followed  by  a  period  of  getting  the  frag- 
ments together  again  for  a  new  economic  structure. 

The  proletariat  is  the  force  that  overturns  capital- 
ism. How  does  it  do  this  ?  By  organized  effort,  applied 
in  the  form  of  revolutionary  upheaval.  But  such  effort 
presupposes  internal  organization.  Moreover,  it  pre- 
supposes the  continuation  of  this  internal  cohesion 
within  the  ranks  of  the  working  class  after  the  period 
of  the  disintegration  of  capitalism.  In  the  general 
breakdown   of  the   links   that  hold   organized   society 


12  INTEODUCTION 

together,  the  links  that  produce  the  internal  cohesion 
within  the  ranks  of  the  proletariat  must  remain  intact 
or  nearly  intact.  Only  in  such  conditions  can  Com- 
munism triumph. 

The  proletariat,  then,  '^trained,  unified,  and  organ- 
ized through  the  mechanism  of  the  capitalistic  produc- 
tive process  itseK,"  must  be  the  active  force  not  only  in 
the  overthrow  of  this  mechanism,  but  also  in  the  con- 
struction of  the  new  apparatus  of  production.  Remain- 
ing over  from  the  preceding  epoch,  less  impaired  in  its 
internal  unity  than  any  other  social  group,  the  organ- 
ized proletariat  now  changes  from  the  exploited  class 
to  the  ruling  class.  It  returns  to  production  as  its 
master,  not  its  servant.  It  establishes  its  economic  dic- 
tatorship, just  as  by  breaking  up  the  old  bourgeois  state 
and  seizing  governmental  authority,  it  establishes  its 
political  dictatorship. 

Two  other  things  remain  over  from  the  period  of  the 
collapse,  viz.,  the  undestroyed  material  equipment, 
machinery,  buildings,  etc.,  and  the  specialized  and 
trained  managing  and  technical  personnel,  "the  ex- 
bourgeoisie  of  the  organizing  type  and  the  technical 
intelligentsia."  With  these  three  elements  at  hand, 
the  proletariat  can,  theoretically,  begin  constructing 
the  new  apparatus  of  production. 

In  its  system  of  organization  it  must  preserve  the  old 
hierarchical  form.  That  is  necessary  for  purposes  of 
productive  discipline.  This  means,  specifically,  that 
"the  technically  trained  intelligentsia  is  above  the  great 
masses  of  the  working  class."  But  this  refers  only  to 
its  technical  duties,  for  at  the  same  time,  it  must  "obey 


INTRODUCTION  13 

the  collective  will  of  the  class,"  which  now  holds  in  its 
hands  the  economic  dictatorship. 

The  theory  of  Communism  thus  makes  the  economic 
ruin  which  has  attended  the  experiment  in  Russia  an 
inevitable  attribute  of  the  transitional  period.  Bukharin 
states  this  bluntly  by  asserting  that  "the  proletarian 
revolution  is  accompanied  by  a  very  great  impairment 
of  productive  forces."  But  this  is  the  price  which  soci- 
ety must  pay  for  its  progress,  Bukharin  further  states 
that  "in  a  society  based  on  class  antagonisms,  the  devel- 
opment of  productive  forces  is  possible  only  through 
their  periodic  destruction."  In  the  capitalistic  society, 
the  wars  and  the  crises  are  such  periods  of  destruction, 
which  eventually  lead  to  greater  development.  But 
there  is  a  stage  at  which  a  crisis  passes  over  into  a  revo- 
lution, when  the  contradictions  of  capitalistic  society 
can  resolve  themselves  only  in  a  violent  internal  clash 
which  overthrows  those  very  forms  of  capitalistic  soci- 
ety that  lead  to  these  contradictions.  The  price  for 
such  an  upheaval,  which  aims  at  freeing  the  economic 
effort  of  mankind  from  the  chains  of  the  contradictions 
of  capitalism,  must,  naturally,  be  greater. 

5.    The  DiciatorsJdp  of  ilie  Communist  Party 

Bukharin's  theoretical  analysis  so  far,  while  based 
inductively  on  the  Russian  experiment,  still  follows 
more  or  less  general  lines.  Problems  in  the  nature  of 
the  exigencies  of  the  transitional  period  arise  and  need 
a  theoretical  motivation.  The  most  important  of  these 
problems  is  that  uf  the  mechanism  of  social  compulsion. 

Both    Lenin's    deductive    analysis    and    Bukharin's 


14  INTEODUCTION 

inductive  development  of  it,  speak  of  a  politico-economic 
dictatorship  of  the  proletarian  class.  But  even  theo- 
retically, the  class  is  still  permeated  with  much  of  the 
social  psychology  of  the  bourgeois  period.  The  class 
itself  needs  leadership.  So  the  theory  of  class  dictator- 
ship is  amended  to  meet  the  situation.  It  develops  into 
a  theory  of  "a  determined  minority"  within  the  prole- 
tarian class,  and  this  minority  takes  the  form  of  the 
Communist  Party.  This  part  of  the  Communist  the- 
ory was  developed  in  the  "Resolution  on  the  Role  of 
the  Communist  Party  in  the  Proletarian  Revolution," 
adopted  by  the  Second  Congress  of  the  Third  Interna- 
tional in  July,  1920. 

The  Resolution  states  that  the  working  class  as  a 
whole  is  divided  into  groups,  trades,  professions,  etc. 
Each  one  of  these  groups  has  interests  of  its  own,  inde- 
pendent of  the  great  historic  interests  of  the  class  as  a 
whole.  At  times,  group  interests  may  interfere  with 
class  interests.  Yet  for  the  processes  represented  by 
the  Communist  movement,  it  is  vitally  important  that 
these  class  interests  be  upheld  all  the  time.  This  can 
be  done  only  by  a  determined  minority  within  the 
working  class  itself,  which  would  have  no  interests 
"different  from  the  interests  of  the  proletariat  as  a 
class,"  but  which  would,  at  every  phase  of  the  move- 
ment, be  cognizant  of  the  "whole  historic  path  of  the 
proletariat."  The  Communist  Party,  then,  is  a  part  of 
the  proletarian  class,  but  "its  most  advanced,  class- 
conscious,  revolutionary  part,"  brought  into  being 
through  a  process  of  natural  selection  among  the  most 


INTEODUCTION  15 

"class-conscious,  self-sacrificing  and  far-sighted  work- 
men." 

The  Resolution  promulgates  the  principle  that  the 
Party  is  always  right,  even  when  its  decision  goes 
counter  to  the  wishes  of  the  great  masses  of  the  working 
class  itself.  Thus,  in  a  system  in  which  the  proletariat, 
as  a  class,  establishes  its  dictatorship  over  all  the  other 
classes  of  the  population,  within  this  class  itself,  a  small 
determined  minority  becomes  its  own  dictator,  and, 
consequently,  the  dictator  of  the  whole  mass  of  people 
covered  by  the  system.  Politically  and  economically, 
the  Communist  Party  is  the  arbiter  of  the  whole  new 
social  order.  All  the  instruments  of  social  compulsion, 
political  and  economic,  must  be  centered  in  its  hands 
and  placed  under  its  undivided  control. 

The  Resolution  further  asserts  that  the  Communist 
Party  must  remain  a  minority  of  the  working  class  as 
long  as  such  means  of  influence  over  the  working  class, 
as  the  school,  the  parliament,  the  church,  etc.,  remain  in 
any  form  in  the  hands  of  the  bourgeoisie.  After  that 
the  Party  may  give  up  its  nature  of  a  closed  and  self- 
perpetuating  group  which  it  has  now,  and  admit  all 
workmen  into  its  ranks.  But  it  must  continue  to  have 
a  hegemony  over  all  social  activities  of  society  until  the 
time  when  classes  themselves  will  have  disappeared, 
i.  e.,  until  the  first  phase  of  Communist  society  will 
have  become  transformed  into  the  second.* 

There  are  two  other  features  of  the  deductive  theory 

*  For  complete  text  of  this  Resolution  see  Memorandum,  entitled, 
"The  2nd  Congress  of  the  Communist  International,"  published  by  the 
Department    of    State,    1920. 


16  INTEODUCTION 

which  have  undergone  transformation  in  the  inductive 
theory  that  is  being  applied  to-day.  The  first  is 
concerned  with  the  reward  for  special  or  technical  serv- 
ices ;  the  second  with  the  general  reward  for  labor  based 
on  the  theory  of  distribution. 

Marx,  on  the  basis  of  the  Paris  Commune  of  1871, 
proclaimed  as  a  guiding  principle  for  the  period  imme- 
diately following  the  overthrow  of  capitalism,  the  estab- 
lishment of  equal  reward  for  all  workmen,  officials, 
managers,  etc.*  This  principle  was  early  subjected  to 
an  alteration  in  the  Soviet  regime  in  Russia. f 

But  more  important  than  that  has  been  the  introduc- 
tion of  premiums  and  penalties,  and  the  whole  system 
of  distribution  built  thereon.  The  theoretical  justifica- 
tion of  the  system  of  premiums  is  given  in  the  resolu- 
tion on  premiums,  adopted  by  the  Russian  Communist 
Party  at  its  Ninth  Congress,  in  April,  1920.  As  for 
the  whole  theory  of  distribution,  we  have  the  following 
concise  statement  of  it  from  an  authoritative  source :  :}: 

The  regulation  of  distribution  in  a  Socialist  state  or  in  a 
state  that  is  on  its  way  to  Socialism,  cannot  be  considered 
merely  from  the  point  of  view  of  consumption.  It  is  not  the 
interests  of  the  consumers,  or,  in  the  best  event,  it  is  not 
only  their  interests  that  should  determine  the  distribution 
policy  of  a  Socialist  state,  but  the  interests  of  the  state  as 
a  whole. 

It  is  upon  this  theory  that  the  system  of  classifica- 
tion of  food  rations  is  based ;  that  workmen  are  divided 

♦  The  State  and  the  Revolution,  p.   16. 

t  Lenin,  "The  Current  Problems  of  the  Soviet  Authority,"  New  York 
edition  in  Russian,  1918. 

i  The  principles  of  Distribution,  art.  in  Ekonomicheskaya  Zhisn, 
June  29,  1920. 


INTRODUCTION  17 

into  groups  in  accordance  with  their  importance  for 
the  given  industry,  etc. 

There  have  been  other  modifications  of  the  original 
theory,  but  these  are  the  most  important  ones. 

Such,  then,  are  the  salient  features  of  the  Communist 
theory  as  it  is  being  applied  in  Russia  in  the  course  of 
the  experiment  in  the  economics  of  Communism.  This 
is  what  the  Communist  leaders  have  set  out  to  do.  In 
the  chapters  that  follow  we  shall  obtain  a  glimpse  of 
what  they  have  done  so  far  in  actual  practice  and  of  the 
methods  that  they  have  employed. 


PART     ONE 
THE  SOVIET  ECONOMIC  SYSTEM 


CHAPTER  I 

THE    UNIFIED   ECONOMIC    PLAN 

The  economic  mechanism  which  the  Soviet  regime  has 
built  up  in  Russia  is  characterized  most  prominently 
by  the  simplicity  of  its  plan  and  the  awkwardness  and 
complexity  of  its  actual  construction.  The  simplicity 
of  the  plan  is,  no  doubt,  due  primarily  to  the  fact  that 
its  various  stages  were  designed  theoretically,  very 
often  with  an  utter  disregard  for  practical  considera- 
tions. The  complexity  and  the  imperfection  of  the 
structure,  as  expressed  in  the  actual  results,  are  due, 
no  doubt,  to  the  character  of  the  materials  with  which 
the  regime  had  to  work. 

The  plan,  underlying  the  whole  Soviet  economic 
mechanism,  is  made  up,  primarily,  of  two  elements,  viz., 
unity  and  hierarchy.  The  first  of  these  elements  calls 
for  an  effective  coordination  of  the  various  phases  of 
the  whole  country's  economic  life  and  a  concentration 
of  the  control  over  these  various  factors.  The  second 
makes  it  imperative  that  these  various  factors  be  classi- 
fied and  then  subordinated  one  to  another  in  an  ascend- 
ing order. 

The  Soviet  economic  mechanism  built  on  this  plan 
may  be  represented  diagramatically  as  follows :   At  the 

21 


22  ECONOMICS  OF  COMMUNISM 

bottom  we  have  the  great  masses  of  the  people,  the  mil- 
lions of  individuals  who  are,  economically,  producers. 
These  masses  are  essentially  inert.  The  more  active 
elements  among  them  are  united  into  trade  or  profes- 
sional unions,  cooperative  organizations  of  all  kinds, 
communal  units,  etc.  All  these  organizations,  termed 
the  productive  associations,  operating  in  industry,  agri- 
culture, the  institutions  for  the  exchange  of  products, 
etc.,  being  the  active  elements  of  the  great  basic  masses, 
serve,  in  some  ways,  as  the  directing  factors  for  these 
masses.  But  they  are,  according  to  their  social- 
economic  peculiarities,  narrowly  class  organizations: 
the  trade  unions  represent  industrial  production,  while 
agricultural  cooperatives  and  communes  represent  rural 
production.  Their  activities  must  be  coordinated; 
otherwise  economic  unity  is  impossible.  This  unity  is 
achieved  through  the  Soviet  State,  which  has  its  expres- 
sion in  the  Soviet  Government,  representing  both  of 
these  great  classes,  the  workmen  and  the  peasants.  The 
Soviet  Government,  operating  through  its  various 
departments,  has  political  functions,  as  well  as  eco- 
nomic. It  is,  in  turn,  controlled  by  the  Communist 
Pai'ty,  which  thus  concentrates  in  its  hands  the  control 
over  both  the  economic  and  the  political  mechanism  of 
the  country.  The  Party  is  a  group  of  restricted  mem- 
bership, consisting  of  the  "vanguard  of  the  proletariat," 
arrogating  to  itself  the  prerogatives  of  the  leader  in  the 
Social  Revolution. 

These  are  the  four  stages  of  the  hierarchy.  The  low- 
est stage  is  inert  and  passive  from  the  point  of  view 
of   directing   functions.     The   other   three   stages    are 


THE  UNIFIED  ECONOMIC  PLAN  23 

active  in  an  ascending  degree,  which  reaches  its  maxi- 
mum development  in  the  Communist  Party.  And  at 
this  highest  stage,  the  directing  functions  extend  not 
only  over  the  immediately  subordinated  stage,  the 
Soviet  Government,  but  also  over  the  other  active  stage 
in  which  the  Communist  Party  exercises  its  control 
through  Communist  groups  in  the  various  organiza- 
tions. 

Neither  this  mechanism,  however,  nor  its  underlying 
plan,  was  thought  out  and  prepared  in  advance  before 
the  revolution.  It  gi-ew  in  the  process,  and  in  the  course 
of  events  its  different  parts  were  literally  piled  one  on 
another.*  The  can-ying  out  of  the  various  phases  of 
the  plan  and  the  construction  of  the  different  forms 
of  the  mechanism  proceeded  under  the  pressui'e  of  neces- 
sity; hence,  in  so  many  respects,  their  complexity  and 
their  cumbersome  nature.  Many  of  these  phases  of  the 
plan  resulted  in  forms  that  are  quite  different  from 
those  expected;  for  the  need  of  hurried  adaptation 
naturally  took  its  toll  of  theoretically  assured  efficacy. 

The  Communist  economic  analysis  as  it  gradually 
formulates  itself  into  practicabilities,  is  not  based  alto- 
gether upon  theory,  but  to  a  large  extent  upon  the 
Russian  experiment  in  the  economics  of  Communism; 
for  in  Russia  Communism  began  its  career  without  clear 

*  The  question  of  the  unified  economic  plan  in  its  entirety  did  not 
assume  much  of  the  clarity  that  it  now  has  until  the  Ninth  All-Russian 
Congress  of  the  Communist  Party,  held  in  April,  1920.  Until  that  time, 
it  was  more  or  less  hazy  and  unformulated.  As  for  the  formulation  of 
the  whole  Communist  economic  analysis  in  its  larger  aspects,  it  dates 
back  only  to  the  Second  Congress  of  the  Third  International,  held  in 
Moscow  in  July  and  August,  1920.  The  resolutions  adopted  at  this 
Congress  present  this  analysis  for  the  first  time  with  a  definiteness  and 
clarity  springing  from  Russia's  experience  for  the  past  three  years 
and    the    perspectives    of    international    affairs. 


24  ECONOMICS  OF  COMMUNISM 

theoretical  formulation  or  even  a  definite  program  of 
economic  activity  and  organization  in  the  domain  of 
both  production  and  distribution.  Its  leaders,  scarcely 
prepared  for  the  ease  and  the  rapidity  with  which  they 
were  able  to  seize  governmental  authority,  had  no  time 
for  preparatory  work  in  the  domain  of  economics.  It 
was  all  they  could  do  to  copc'  with  the  huge  political 
problems  piled  high  before  them  by  their  sudden  vic- 
tory. It  is  true  that  the  economic  situation  of  the  coun- 
try was  already  desperate.  Never  powerful  and  smooth- 
running,  the  industrial  and  trade  apparatus  of  Russia 
was  badly  shaken  up  by  the  war.  In  its  already  weak- 
ened condition,  the  new  demands  placed  upon  it  by  the 
first,  the  republican  period  of  the  Revolution,  consti- 
tuted quite  a  shock.  Yet  in  their  criticism  of  Russia's 
economic  situation  under  the  Socialist.-Liberal  regime 
of  the  Provisional  Govenmaent,  the  leaders  of  Bolshev- 
ism who,  later  on,  became  the  gTiiding  spirits  of  Com- 
munism, were  content  with  demagogical  attacks  and  the 
alluring  doctrine  of  destruction.  ''Loot  the  Loot"  was 
their  watchword,  and  with  this  slogan  on  their  banners, 
they  entered  upon  the  work  of  building  up  a  new  system 
of  economic  organization. 

The  difficulties  which  the  Bolsheviki  faced  at  the  very 
start  cannot  be  gainsaid.  It  is  true  that  through  their 
seizure  of  goveramental  authority  they  received  into 
their  possession,  for  purposes  of  experimenting  in  Com- 
munism, a  country  of  almost  unlimited  natural 
resources,  but  these  resources  are  available  to  only  a 
small  extent,  because  of  the  country's  lack  of  economic 
development. 

The  creation  of  an  economic  apparatus  for  the  utiliza- 


THE  UNIFIED  ECONOMIC  PLAN  25 

tion  of  these  resources,  always  hampered  in  its  develop- 
ment by  the  bureaucratic  system  of  the  Imperial 
regime,  had  been  built  up  on  the  bases  of  capitalism, 
i.  e.,  on  private  initiative  of  the  entrepreneur  and  indi- 
vidual reward  for  his  activities.  Whatever  remained 
of  this  apparatus  after  the  war  and  during  the  first 
period  of  the  Revolution  was  naturally  permeated  by 
the  psychology  created  in  the  whole  course  of  its 
development. 

The  bourgeois  class,  whose  initiative  and  guidance 
still,  to  some  extent,  controlled  and  directed  this  appa- 
ratus, when  it  faced  the  Bolshevist  cowp  d'etat,  proved 
to  be  far  too  weak  to  offer  an  effective  resistance  to  the 
establishment  of  a  regime  which,  at  that  time,  at  least, 
spelled  ruin  to  it.  And  yet  it  was  strong  enough  and 
deeply  enough  set  in  its  habits  of  thought  and  of  action 
to  refuse  submission  to  the  new  regime.  This  attitude 
of  passive  resistance  robbed  the  economic  apparatus  of 
its  directing  power. 

The  working  class,  through  the  months  of  the  revolu- 
tion that  had  already  elapsed,  became  more  and  more 
determined  to  interpret  the  revolution  in  terms  of  imme- 
diate material  benefits.  The  doctrine  of  Socialism^ 
preached  to  them  in  the  "simplified"  forms  of  propa- 
ganda pamphleteering  and  ignorant  agitation,  assumed 
for  them  a  significance  which  they  themselves  wanted  to 
read  into  it.  Taken  in  its  entire,  perhaps  Utopian, 
idealogy,  this  doctrine  means  such  an  organization  of 
society  in  which  there  is  the  least  possible  wastage  of 
human  effort  in  unproductive  work,  in  other  words,  free- 
dom for  work,  in  tbe  broadest  meaning  of  that  word. 
But  the  agitation  that  was  carried  on  in  Eussia  in  all  the 


26  ECONOMICS  OF  COMMUNISM 

uproar  and  dazzle  of  revolutionary  demagoguery  was 
easily  enough  interpreted  by  the  rank  and  file  of  the 
proletariat  as  signifying  freedom  from  work.  Those 
who  were  preaching  Bolshevism,  at  that  time  still 
marching  under  the  gxiise  of  an  extreme  wing  of  the 
Social-Democratic  movement,  were,  of  course,  deliber- 
ately responsible  for  this  demoralization,  which,  at  the 
very  outset,  became  one  of  the  gravest  difficulties  that 
the  Soviet  regime  itself  had  to  face. 

To  these  difficulties  which  constituted  the  economic 
legacy  that  the  Soviet  regime  received  from  the  pre- 
ceding period,  there  was  added  another  difficulty  of  an 
even  more  serious  nature,  imposed  upon  the  regime  by 
the  very  essence  of  its  doctrine.  The  task  it  faced  con- 
sisted not  alone  in  rebuilding  the  economic  apparatus 
and  organizing  productive  eii'ort,  but  in  placing  both 
upon  an  entirely  new  basis.  The  Bolsheviki  set  out  to 
purge  the  economic  organization  of  Russia  of  its  capi- 
talistic spirit  and  to  breathe  into  it  their  version  of  the 
Socialistic  spirit.  And  it,  indeed,  required  temerity, 
to  say  the  least,  to  plunge  into  such  an  enterprise  and  to 
attempt  such  an  experiment,  when  the  subject  of  the 
experiment  was  already  tottering  and  was  scarcely  held 
together  by  the  inertia  of  those  very  habits  which  it  was 
determined  to  destroy. 

The  tactics  of  this  first  stage  of  the  transitional 
period,  as  formulated  by  Lenin,  required  the  process 
of  piling  a  sufficiently  large  number  of  the  fragments 
of  the  existing  order,  before  starting  to  build  the  new 
order.  The  tactics  made  imperative  by  the  need  of 
gaining  the  favor  of  the  masses  required  a  demagogical 
appeal  to  their  instinct  of  destruction.     In  either  case, 


THE  UNIFIED  ECONOMIC  PLAN  27 

the  tactics  used  tended  to  bring  results  desired  by  the 
Bolshevist  leaders.  These  tactics  were  adhered  to  in 
activities  along  economic  lines,  as  well  as  along  political 
lines. 

It  was  not  until  a  much  later  period  that  an  eco- 
nomic program  formulated  itself  and  an  economic 
system  was  worked  out.  To-day  this  system  consists  of 
three  elements :  industrial  production,  cooperative  dis- 
tribution, and  agTicultural  production.  Each  of  these 
elements  has  now  reached  a  certain  degree  of  develop- 
ment in  the  fonn  which  the  application  of  the  Com- 
munist theory  requires.  But  before  this  degree  of 
development  was  reached,  each  one  of  these  elements 
passed  through  a  number  of  stages,  that  contributed 
to  the  manner  in  which  it  finally  shaped  itself.  In  the 
succeeding  chapters  we  shall  take  up  these  various 
stages  and  block  out,  in  general  outlines,  the  picture 
of  each  one  of  these  three  elements  of  the  Soviet  eco- 
nomic system,  operating  as  a  mechanism,  under  a  uni- 
fied plan  of  hierarchical  centralization  and  coordina- 
tion. 


CHAPTER  II 


NATIONALIZED   PRODUCTION 


The  first  element  of  the  Soviet  economic  system  is  the 
nationalized  form  of  industrial  production.  The  term 
"nationalized  production"  has  significance  along  two 
fundamental  lines:  the  question  of  ownership  and  the 
question  of  operation,  which  resolve  themselves  into  the 
matters  of  general  supervision,  management,  technical 
operation,  and  the  disposal  of  the  product  created. 
From  the  point  of  view  of  industrial  production,  the 
Soviet  system  has  passed  through  two  stages :  first,  the 
preliminary  stage  of  labor  control,  and  then  the  stage 
of  nationalization  proper. 

1.    Labor  Control 

As  far  as  the  Russian  industrial  proletariat  was  con- 
cerned, the  process  of  piling  up  fragments  of  the  old 
order  was  proceeding  for  months  before  the  Bolshevist 
coup  d'etat  with  the  strength  of  an  elemental  move- 
ment. Those  who  inspired  the  working  masses  by  their 
propaganda  and  agitation,  laid  particular  emphasis  on 
the  physical  fact  of  ownership  as  the  fundamental  fac- 
tor in  the  economic  condition  of  the  working  class.  It 
was  easy  enough  to  convince  the  masses  of  the  prole- 
tariat, aroused  to  a  state  of  unprecedented  tension  by 

28 


NATIONALIZED  PRODUCTION  29 

the  March  Revolution,  that  the  abolishing  of  capitalism 
meant  simply  the  establishment  of  their  control  over  the 
already  existing  enterprises.  The  seeds  of  agitation 
thrown  into  this  soil  gTew  up  in  the  course  of  this  period 
into  two  movements,  as  elemental  and  unformed  in  their 
nature  as  w^as  the  whole  agitation  among  the  laboring 
masses  during  this  period.  These  two  movements  were 
the  formation  of  factory  committees  and  the  gi'owth  of 
the  trade  or  professional  union  movement. 

The  factory  committees  represented  a  direct  out- 
growth of  the  very  first  period  of  the  Revolution. 
Frightened  by  the  suddenness  and  the  magnitude  of  the 
events  that  so  swiftly  unfolded  themselves  in  March, 
1917,  many  heads  and  managers  of  governmental,  as 
well  as  private,  institutions  and  enterprises  fled  from 
their  posts,  and  in  order  to  carry  on  their  work,  com- 
mittees of  workmen  and  employees  were  formed.  A 
more  or  less  permanent  and  increasingly  insistent  move- 
ment grew  out  of  this  purely  accidental  beginning. 

As  time  went  on  and  as  the  agitation  of  the  extremist 
elements  increased  in  extent  and  in  intensity,  these 
factory  committees  began  to  dispute  seriously  industrial 
authority  with  the  returned  or  the  remaining  owners 
and  managers.  While  not  really  having  a  legal  status 
under  the  Provisional  Government,  the  factory  commit- 
tees gradually  came  to  exercise  an  almost  directing  influ- 
ence among  the  workmen.  They  were  looked  upon  as 
the  possible  instruments  of  labor  control  over  the  pro- 
ductive apparatus,  certainly  as  the  immediate  instru- 
ment in  the  hands  of  the  working  class  for  enforcing 
its  demands.  "Labor  control,  through  the  instrumen- 
tality of  the  factory  committees,"  became  the  watch- 


30  ECONOMICS  OF  COMMUNISM 

word  wliicli  tiie  masses  of  the  workmen  readily  accepted, 
and  which  the  leaders  of  Bolshevism  seized  upon  and 
cultivated  very  assiduously. 

In  discussing  this  side  of  the  Bolshevist  progi'am, 
shortly  before  the  jSTovember  overturn  of  the  Provisional 
Government,  Lenin  formulated  the  role  of  labor  con- 
trol in  the  establishment  of  Conununism,  through  the 
substitution  of  ''armed  workmen"  for  "capitalists  and 
officials"  for  purposes  of  controlling  production  and 
distribution,  as  follows : 

Such  control  is  the  most  important  thing  that  is  necessary 
for  the  proper  functioning  of  the  first  phase  of  Communistic 
society.  All  citizens  then  become  employees  of  the  state,  just 
as  the  armed  workmen.  All  the  citizens  become  the  employees 
of  a  single  state  "syndicate,"  comprising  the  whole  nation. 
The  important  thing  is  that  they  should  work  equally,  con- 
scientiously, and  be  paid  alike.* 

Of  course,  this  was  not  the  same  kind  of  labor  control 
as  the  workmen  thought  they  were  getting  on  the  basis 
of  their  experience  with  the  factory  committees.  But 
that  did  not  matter,  for  "labor  control"  was,  first  of  all, 
important  as  a  slogan.  The  niceties  of  interpretation, 
even  when  they  were  of  detennining  character,  did  not 
appear  until  later. 

One  of  the  first  acts  of  the  Soviet  Government  was 
the  legalization  of  the  factory  committees.  The  decree 
concerning  the  establishment  of  labor  control  through 
the  instrumentality  of  factory  committees  was  issued 
on  November  14,  1917.  This  decree  did  not  contem- 
plate the  nationalization  of  industry,  i.  e.,  the  confisca- 

•  V.  Ilyin  (N.  Lenin),  "The  State  and  the  Revolution,"  p.  42. 


NATTOXALIZED  PEODUCTION  31 

tion  by  the  state  of  the  various  enterprises.  On  the 
contrary,  it  contemplated  the  continuation,  at  least  for 
the  time  being,  of  the  system  of  private  ownership  of 
the  various  enterprises,  but  it  officially  placed  control 
over  the  financial  operations  of  each  enterprise,  over  its 
supply  of  fuel  and  raw  materials,  its  technical  person- 
nel, and  other  matters  of  vital  importance  in  the  hands 
of  the  workmen  employed  at  the  given  enterprise. 

Each  enterprise,  then,  continued  to  be  considered  as 
a  unit,  and  the  factory  committee  in  each  of  them,  while 
realizing  labor  control,  still  had  isolated  and  local 
character.  The  decree  proposed  to  eliminate  this  and 
introduce  coordination  among  different  enterprises  and 
groups  of  enterprises  by  the  creation  of  provincial, 
regional  and  All-Eussian  Soviets  of  Labor  Control. 
But  the  Soviet  regime  immediately  encountered  difficul- 
ties and  conditions,  which  made  it  imperative  to  adopt 
an  entirely  different  policy. 

The  first  difficulty  was  the  resistance  of  the  owners 
of  enterprises  and  of  their  managing  and  technical 
personnel.  This  resistance  took  the  form  of  what  the 
Soviet  authorities  have  termed  ''sabotage,"  which  meant 
refusal  on  the  part  of  owners,  managers  and  specialists 
to  accept  the  conditions  of  labor  control  imposed  upon 
them  by  the  decree  of  JSTovember  14.  The  only  possible 
penalty  which  could  have  been  imposed  upon  the 
"saboteurs,"  short  of  capital  punishment  (which  began 
to  be  applied  much  later),  was  the  confiscation  of  their 
enterprises.  The  management  of  such  confiscated  enter- 
prises had  to  be  placed  in  the  hands  of  factory  com- 
mittees, as  the  only  institutions  available  which  were 
at  all  suited  for  such  a  purpose.     Thus,  by  force  of 


32  ECONOMICS  OF  COMMUNISM 

necessity,  the  Soviet  Government  found  itself  impelled 
to  place  in  the  hands  of  factory  committees  functions 
which  went  far  beyond  those  of  labor  control,  viz., 
functions  of  factory  management. 

The  second  difficulty  lay  in  the  fact  that  the  rank 
and  file  of  the  workmen  placed  a  different  interpreta- 
tion on  labor  control  from  the  one  which  was  formulated 
in  theory  by  Lenin  and  applied  in  practice  through  the 
decree  of  November  14.  From  the  very  start,  two 
diametrically  opposed  tendencies  developed  in  the  fac- 
tory committees  movement.  The  first  tendency  was 
for  the  retention  of  the  capitalists  and  the  preservation 
of  labor  control  within  the  limits  prescribed  by  the 
decree.  The  second  and  the  more  widely  accepted  ten- 
dency, urged  by  the  central  organization  of  the  factory 
committees  movement,  was  for  the  elimination  of  the 
capitalists  and  the  concentration  of  all  functions  of 
management  in  the  hands  of  the  factory  committees.* 
The  second  tendency  had  practical  results,  as  well  as 
considerable  influence.  Many  industrial  enterprises 
were  simply  seized  by  the  workmen  outright,  the  owners 
and  the  managers  were  driven  out,  and  the  management 
fell  into  the  hands  of  the  local  factory  committees. 

Thus,  in  the  process  of  their  economic  work  at  the 
very  beginning,  the  Soviet  leaders  realized  the  need  of 
some  central  institution  whose  work  would  not  be  lim- 
ited to  control  alone,  but  would  extend  considerably 
outside  of  it.  It  required  months  to  work  out  even  the 
first  outlines  of  such  an  institution,  and  in  the  mean- 
time labor  control  remained  ostensibly  the  economic 

♦  Soviet  Yearbook,  published  by  the  All-Russian  Central  Executive 
Committee.     Moscow,    1919,    p.    113. 


NATIONALIZED  PRODUCTION  33 

system  under  which  Russia  worked,  while  the  factory 
committees  continued  to  be  the  instruments  of  this 
system,  carrying  out  functions  for  which  they  were 
not  at  all  prepared. 

The  difficulties  encountered  were  piling  up  thick  and 
fast.  Many  of  the  larger  enterprises  of  the  country 
showed  such  determined  resistance  to  the  introduction 
of  labor  control,  that  it  became  necessary  to  confiscate 
them  during  the  early  stages  of  the  regime.  For  exam- 
ple, the  powerful  group  of  metallurgical  enterprises  in 
the  Ural  district,  one  of  the  most  important  metallur- 
gical centers  of  Russia,  had  to  be  nationalized  in  this 
manner  during  the  first  two  or  three  months  of  the 
Soviet  regime.  The  coal  industry  was  also  nationalized 
very  early. 

The  management  of  these  vitally  important  enter- 
prises was  given  over  to  the  factory  committees.  The 
results  of  this  management  proved  disastrous  in  two 
ways:  the  productivity  fell  off  catastrophically,  while 
the  expenses  increased  by  leaps  and  bounds.  The  first 
result  was  due  to  the  fact  that  in  the  enterprises  nation- 
alized during  this  first  period,  the  specialists  were  either 
killed  off  or  driven  out.  There  was  no  one  to  take  their 
places  at  the  responsible  positions  which  they  had  occu- 
pied. Under  those  conditions,  the  factories,  foundries 
and  mines,  run  by  committees  of  workmen,  chosen,  be- 
sides, for  political  rather  than  for  practical  reasons, 
could  not  continue  to  operate  with  anything  like  their 
normal  degree  of  efficiency. 

The  character  of  management  provided  by  the  com- 
mittees of  workmen  in  the  absence  of  specialists  alone 
would  have  been  responsible  for  an  increase  in  expenses. 


34  ECONOMICS  OF  COMMUNISM 

To  this  was  added  the  tremendous  rise  in  wages,  as  well 
as  a  very  rapid  decrease  in  the  number  of  working  hours. 
The  first  two  months  of  labor  control  produced  a  deficit 
of  nearly  two  billion  roubles,  which  had  to  be  covered  by 
the  state  treasury.  The  period  of  labor  control  and  of 
the  active  work  of  the  factory  committees  lasted  until 
the  summer  of  1918,  when  the  work  of  nationalization 
was  in  full  swing,  and  the  system  of  the  councils  of 
national  economy,  through  which  the  work  of  nationali- 
zation was  carried  out,  was  in  more  or  less  efiicient 
operation.  During  this  early  period,  also,  the  factory 
committees  had  to  encounter  active  competition  on  the 
part  of  the  other  phase  of  the  labor  movement  which 
developed  during  the  first  period  of  the  Russian  Kevolu- 
tion,  viz.,  the  trade  or  professional  unions. 

The  difference  between  these  two  forms  of  organ- 
ization is  obvious,  of  course.  The  factory  committees 
are  local  and  represent  all  the  kinds  of  workmen  em- 
ployed in  a  given  enterprise.  The  trade  and  profes- 
sional unions  have  a  much  wider  area  of  operation  and 
unite  those  engaged  in  a  given  trade  or  profession, 
rather  than  at  a  given  enterprise.  The  two  organiza- 
tions, however,  came  in  conflict  over  the  questions  of 
control  at  the  factories  and  foundries.  The  unions 
refused  to  abdicate  what  they  considered  their  rights 
of  control  in  favor  of  the  factory  committees.  The  com- 
mittees, on  the  other  hand,  refused  to  give  up  to  the 
unions  any  part  of  what  they  considered  their  control 
prerogatives.  The  competition  grew  particularly  when 
first  attempts  were  made  to  unite  the  factory  commit- 
tees into  group,  provincial   and  regional  associations. 


NATIONALIZED  PEODUCTION  35 

The  unions  saw  in  this  a  menace  to  their  own  develop- 
ment. 

At  the  First  All-Eussian  Congress  of  Trade  and  Pro- 
fessional Unions,  held  January  3-9,  1918,  and  represent- 
ing nineteen  associations  with  a  membership  of 
2,532,000,  a  resolution  was  adopted,  calling  for  a 
merging  of  the  two  movements,  in  order  to  destroy  the 
parallelism  which  was  created  by  their  activities  inde- 
pendent of  each  other.  According  to  this  resolution, 
the  committees  were  to  remain  in  existence,  but  were, 
thenceforward,  to  act  merely  as  the  local  organs  of  the 
trade  and  professional  unions.  At  a  united  conference 
of  the  committees  and  the  unions,  held  in  February, 
1918,  this  system  was  adopted  in  its  entirety. 

The  definite  establishment  of  the  system  of  nation- 
alization  in  industry  soon  restricted  very  considerably 
the  scope  of  activities  of  both  the  unions  and  the  com- 
mittees. Starting  as  preeminently  economic  move- 
ments, very  much  along  the  lines  of  syndicalism,  both 
of  these  phases  of  the  labor  movement  have  been  gradu- 
ally losing  their  more  or  less  independent  character  and 
have  become  fitted  into  the  scheme  of  hierarchic  subor- 
dination under  the  unified  economic  plan.  And  it  was 
only  natural  that  different  tendencies  should  have 
developed  within  the  trade  union  movement  as  to  the 
role  which  these  labor  organizations  should  play  in  the 
economic  life  of  the  country. 

The  mutual  antagonism  among  these  various  tenden- 
cies came  to  a  head  at  the  beginning  of  1920,  when  two 
important  measures  were  taken  by  the  Government, 
viz.,  the  militarization  of  labor  and  the  introduction  of 
individual  inanagement   in   industry.      As  a  result  of 


36  ECONOMICS  OF  COMMUNISM 

this,  the  semi-syndicalist  movement  again  began  to 
demand  independence  for  the  trade  union  movement  to 
the  extent  of  insisting  that  all  economic  functions,  so 
far  as  industrial  production  is  concerned,  should  be 
placed  in  the  hands  of  the  trade  unions.  The  outcome 
of  the  conflict,  which  was  finally  fought  out  at  the  Third 
All-Russian  Congress  of  the  Professional  and  Trade 
Unions,  in  April,  1920,  was  that  the  status  of  the 
unions  was  definitely  established  in  the  sense  prescribed 
by  the  general  economic  plan. 

2.    Nationalization 

The  transition  from  the  preliminary  stage  of  labor 
control  to  that  of  nationalization  was  gradual  and  a 
matter  of  months.  As  we  have  already  noted,  the 
nationalization  of  industry  was  not  at  the  beginning 
carried  out  by  the  Soviet  regime  as  a  part  of  any  con- 
structive plan,  but  rather  as  a  punitive  measure  in  the 
guise  of  confiscation. 

During  the  first  six  months  of  the  Soviet  regime,  i.  e., 
by  May  15,  1918,  two  hundred  and  thirty-four  enter- 
prises were  nationalized,  half  of  them  for  resistance 
and  sabotage.  Since,  during  the  latter  part  of  this 
period,  the  nationalization  of  industry  was  already  pro- 
ceeding in  a  more  or  less  organized  and  systematic 
manner,  this  figure  is  a  very  fair  indication  of  the  fact 
that  during  the  first  months  of  the  regime,  accidental 
confiscation,  rather  than  systematic  and  planned  nation- 
alization, was  the  rule.  This  refers,  of  course,  to  indus- 
try only.  The  first  attempts  at  nationalization  were  in 
the    domain    of    finance;    the    decree    concerning    the 


NATIONALIZED  PRODUCTION  37 

nationalization  of  private  and  commercial  banks  was 
issued  on  December  15,  1917,  But  the  considerations 
which  dictated  this  early  effort  of  nationalization  were 
fiscal  and  political  rather  than  economic.  The  chief 
reason  was  the  desire  on  the  part  of  the  Government  to 
lay  its  hands  on  the  deposits  and  current  accounts  at 
these  banlvs,  and  particularly,  on  the  contents  of  the 
safety  deposit  vaults.  This  early  nationalization  of 
the  banks  was  not  a  part  of  any  economic  plan. 

In  discussing  the  course  of  the  putting  into  operation 
of  the  system  of  nationalization,  R.  Arsky,  who  is  one 
of  the  best  of  the  Soviet  economists,  speaks  of  this  early 
period  as  follows : 

At  that  time  there  could  not  be  any  question  of  a  con- 
sistent and  economically  planned  nationalization  of  industry. 
It  required  a  considerable  period  of  time  for  the  proletariat 
to  realize  the  necessity  of  a  definite  plan  in  the  application  of 
nationalization.* 

The  nationalization  of  industry  was  begun  in  1917. 
The  Putilov  foundries,  for  example,  were  nationalized 
by  the  decree  of  December  29,  1917.  The  first  indus- 
tries to  be  nationalized  were  the  "heavy,"  the  basic  ones : 
coal,  iron,  metallurgy,  transportation.  After  the  Ural 
metallurgical  enterprises,  attempts  were  made  to  effect 
the  nationalization  of  the  Donetz  coal  basin  and  the 
South  Russian  iron  fields  and  metallurgical  works. 
But  these  attempts  were  interrupted  by  the  German 
occupation  of  South  Russia,  following  Hetman  Skoro- 
padsky's  accession  to  power. 

•  R.  Arsky,  "What  the  Proletariat  Has  Gained  through  Nationaliza- 
tion." Art.  in  Vestnik  Zhisni,  No.  3-4,  publighetj  by  the  AII-Russiaa 
Central  Executive  Committee.     Moscow,  1919, 


38  ECONOMICS  OF  COMMUNISM 

After  the  effects  produced  by  the  Brest-Litovsk  peace 
wore  off  somewhat,  the  work  of  nationalization  was 
resumed  and  continued  at  an  increasingly  rapid  tempo. 
During  the  first  period  (up  to  May,  1918)  about  fifty 
enterprises  per  month  were  nationalized  and  confiscated. 
After  May,  the  rate  increased  to  about  a  hundred  per 
month.  And  it  is  interesting  that  the  work  of  taking 
over  these  enterprises  was  done  by  local  organs  and 
councils,  rather  than  from  the  center.* 

By  the  end  of  1918,  the  following  industries  were 
completely  nationalized :  mining,  oil,  rubber,  electro- 
technic,  sugar,  water  transportation.  The  following 
were  only  partially  nationalized :  metallurgy,  textiles, 
chemical,  polygraphic,  etc. 

At  the   present  time  practically   all   the   important 

*  The  following  table,  given  by  the  Soviet  Yearbook  (loc.  cit.,  p. 
134)  shows  the  tempo  with  which  the  work  of  nationalization  proceeded 
during  the  first  period  : 

Period  of  nationalization  No.  of  nationalized  No.  of  sequestered 
(Years  1917-8  Old  Style)                         enterprises.  enterprises. 

October   23 — May    15  234  70 

May    15 — June    1  110  80 

June   1 — July   1  132  61 

July  1 — Au^st  1  91  3 

Thus,  the  period  of  greatest  activity  was  during  the  months  of  May 
and  June,  probably  under  the  impetus  given  by  the  First  All-Russian 
Congress  of  Councils  of  National  Economy,  held  early  in  May,  1918. 

The  following  table,  taken  from  the  same  source,  Indicates  the 
manner  In  which  these  enterprises  were  nationalized  (the  figures  cover 
the  period  up  to  July   1,   1918)  : 

Nationalized  '''^        Sequestered 
No.     %  No.      % 

1.  By   the    Council   of    People's    Commis- 

saries and  the   Supreme   Council   of 

National    Economy    107     23  25     12 

2.  By     the     Regional     Councils     of     Na- 

tional Economy 216      46  124      58 

3.  By   local   organs   and   local   organiza- 

tions            142     31  62     30 


NATIONALIZED  PRODUCTION  39 

industrial  enterprises  are  tlie  nationalized  property  of 
the  state.  Some  small  ones  still  continue  to  iiin  on  a 
non-nationalized  basis,  but  their  work  and  existence 
are  precarious  at  best,  since  all  the  sources  of  fuel  and 
raw  materials  are  held  by  the  Government. 

With  the  banks  and  the  whole  financial  system  of  the 
country  nationalized,  and  with  the  industries  well  on 
the  way  toward  complete  nationalization,  there  still 
remained  one  domain  of  economic  life  which  required 
attention.  That  was  the  question  of  distribution,  i.  e., 
trade.  This  question  was  settled  in  the  summer  of 
1918,  when  all  trade  and  commerce  were  nationalized, 
thus  completing  the  preliminary  cycle  of  nationalization 
in  industrial  production. 

The  fundamental  idea  of  nationalization,  when 
stripped  of  its  technicalities,  is  simple  enough. 
Nationalization  means  taking  over  by  the  state  all 
industrial,  trade,  and  financial  organizations  and  enter- 
prises, formerly  owned  and  managed  by  private  indi- 
viduals, but,  after  the  nationalization,  owned  and  man- 
aged by  the  state.  The  purpose  of  this  is  to  eliminate 
profits  and,  consequently,  the  exploitation  of  those  who 
work  in  an  enterprise  by  those  who  own  it.  Owned  and 
managed  by  the  state,  the  productive  apparatus  of  the 
country  would,  theoretically,  sei-ve  the  best  interests 
of  all.  The  first  tangible  result  of  nationalization  must 
be  the  unification  of  the  country's  whole  economic  life 
and  the  concentration  of  its  management  in  the  hands 
of  the  state.  This  is  intended  for  the  purpose  of  elimi- 
nating the  waste,  incident  upon  the  competition  and 
parallelism  of  the  capitalistic  economic  system.  Such 
unification    and    concentrated   management    require   a 


40  ECONOMICS  OF  COMMUNISM 

unified  economic  plan,  while  the  working  out  and  the 
realization  of  such  a  plan  requires  a  unifying  center,  a 
single  organ  of  management,  looking  after  all  the  phases 
of  national  economy. 

It  is  natural  that  the  actual  carrying  out  of  such  a 
system,  even  if  it  does  sound  fairly  simple  in  theory,  is 
most  difficult.  And  the  Soviet  economists  certainly 
found  it  so.  There  were  three  especially  important  diffi- 
culties that  they  faced  from  the  very  beginning. 

The  first  difficulty  consisted  in  finding  the  forms  of 
organization  suitable  for  the  carrying  out  of  the  system. 
These  forms  were  found  early  enough  and  took  the 
shape  of  the  cumbersome  system  of  councils  of  na- 
tional economy.  The  question  of  forms,  however, 
was  a  comparatively  easy  matter,  for  it  was  realized 
from  the  start  that  only  the  general  outlines  had  to  be 
devised;  the  rest  would  work  out  in  the  process  of 
development. 

Much  more  important  was  the  second  difficulty,  which 
consisted  in  coordinating  the  new  system  of  manage- 
ment. Each  enterprise  had  to  be  managed.  Groups 
of  enterprises,  sometimes  whole  industries,  required 
unified  control.  Different  parts  of  the  country  required 
regional  control.  Finally,  all  the  groups  and  industries 
and  regions  required  national  control.  The  apparatus 
for  effecting  all  this  management  and  control  was  a 
matter  of  forms.  But  an  effectual  working  of  this 
apparatus  was  a  matter  of  coordination,  which  involved 
not  only  mechanical  and  formal,  but  also  human  and 
psychological  factors.  The  Soviet  regime  has  succeeded 
in  solving  only  very  few  of  the  difficulties  involved  in 


NATIONALIZED  PEODUCTION  41 

this.     Many    important   ones    stiU   press   for   solution 
to-day. 

The  third  and  the  still  more  important  difficulty  was 
that  of  getting  efficiency  out  of  the  system.  This  diffi- 
culty involved  in  its  solution  human  and  psychological 
factors  even  more  than  did  the  second.  With  the 
specialists  and  practically  the  whole  technical  personnel 
driven  out,  removed,  or  gone  of  its  own  accord,  the 
problem  of  management,  particularly  at  the  individual 
enterprises,  was  one  of  almost  insurmountable  difficulty, 
unless  some  of  the  specialists  could  be  induced  to  return. 
As  for  the  rank  and  file  of  the  workmen,  the  new  system 
was  scarcely  conducive  to  enthusiasm  on  their  part.  In 
the  first  place  they  were  forced  to  give  up  definitely 
the  idea  that  the  workmen  employed  in  each  particular 
enterprise  were  going  to  own  or  at  least  control  that 
enterprise.  This  idea  had  been  carefully  inculcated  in 
them  by  the  demagogical  agitators,  and  the  introduction 
of  nationalization  was,  indeed,  a  disappointment  to 
them.  For  under  the  system  of  nationalized  industry, 
the  workmen  became  simply  servants  of  the  state, 
forced  to  submit  to  the  officials  appointed  by  the  state 
in  precisely  the  same  manner  in  which  they  had  been 
formerly  forced  to  submit  to  private  entrepreneurs  and 
their  managers.  Moreover,  iromediately  after  the  appa- 
ratus of  management  was  somewhat  put  together  under 
nationalization,  the  Soviet  authorities  began  to  exact 
labor  discipline,  which,  naturally,  appeared  so  hard  and 
prosaic  to  the  rank  and  file  of  the  workmen  after  the 
revolutionary  carousal,  that  the  task  of  obtaining  effi- 
ciency under  the  circumstances  became  increasingly 
difficult. 


42  ECONOMICS  OF  COMMUNISM 

3.     The  Councils  of  National  Economy 

The  Soviet  claim  to  originality  in  the  domain  of  eco- 
nomic construction  is  based  on  the  councils  of  national 
economy.  The  whole  system  of  nationalized  produc- 
tion and  distribution  is  based  upon  this  new  system  of 
industrial  management,  which  grew  up  in  the  course  of 
Russia's  experiment  in  the  economics  of  Communism. 
And  just  as  all  the  rest  of  Soviet  forms,  the  councils 
of  national  economy  are  built  on  a  strictly  hierarchical 
principle. 

Since  we  are  dealing  with  a  strictly  hierarchical  sys- 
tem, it  is  best  to  start  at  the  very  top.  The  system  of 
management  for  the  nationalized  productive  apparatus 
of  Russia  is  crowned  by  the  Supreme  Council  of 
National  Economy.  This  institution  was  created  by  a 
decree  of  the  Council  of  People's  Commissaries,  issued 
on  December  1,  1917.  As  constituted  at  the  beginning, 
the  Council  consisted  of  not  over  sixty  members,  repre- 
senting the  All-Russian  Central  Executive  Committee 
(i.  e.,  what  amounts  to  the  legislative  body  under  the 
Soviet  political  system),  the  trade  and  professional 
unions,  and,  at  first,  the  factory  committees.  Its  execu- 
tive body  was  a  Prsesidium,  consisting  of  five  members. 
The  membership  of  the  Presidium  later  on  was  raised 
to  nine. 

The  Supreme  Council  consisted,  at  the  beginning,  of 
eighteen  sections,  each  of  which  had  charge  of  an  impor- 
tant branch  of  the  country's  economic  life.  The  most 
important  of  these  sections  were  the  following:  metal, 
mining,  fuel,  chemical,  electro-tcchnic,  public  works, 
waterways,  cooperation,  transportation.     Each  section 


NATIONALIZED  PEODUCTIOX  43 

had  general  siipei*vision  over  the  work  of  its  particular 
branch. 

Besides  the  eighteen  sections,  there  were  created  at 
the  beginning  fourteen  committees,  in  charge  of  less 
important  branches  of  the  countiy's  economic  life. 
These  are  called,  "giavki"  (an  abbreviated  form  of 
"main  committee")  and  ' 'center"  (an  abbreviated  fomi 
of  '^central  committee").  The  first  branches  placed  in 
charge  of  these  committees  were  the  textiles,  leather, 
sugar,  tea,  soap,  etc. 

The  sections  and  the  committees  are  headed  by  colle- 
giums,  consisting  usually  of  four  or  five  members. 
These  collegiums  must  include  specialists,  appointed  by 
the  Priesidiiun  of  the  Supreme  Council.  As  new  indus- 
tries were  taken  over,  the  number  of  the  '^glavki"  and 
"centers"  increased,  until  at  the  present  time  there 
are  fifty-three  of  them,  and  the  total  number  of  the 
members  of  their  collegiums  is  two  hundred  and  thirty- 
two.* 

Subordinated  to  the  Supreme  Council  and  directly 
responsible  to  it  are  the  regional  councils  of  national 
economy,  of  which  there  is  a  large  number.  Each  of 
these  councils  has  jurisdiction  over  a  given  territory 

•  M.  Milutin,  one  of  the  high  officials  in  the  Supreme  Council,  in  an 
article    in    the   Ekonomicheskaya   Zhisn   for   March    27,    1920,    gives   the 
following  tables  to  show  the  composition  of  the  Collegiums  : 
No.    of      No.    of      Workmen      Engineers      Directors    Employees     Miscel. 
dep'ts    members     No.      %  No.      %  No.      %        No.      %       No.   % 

53  232  83       36  79       34  1       0.4        50       22        19   8 

The  following  table  shows  the  political  affiliations  of  this  high  bureau- 
cracy  of   the   Russian    economic   system : 

Party  Number  %   of  the   whole 

Communists     115  50 

Non-Party   105  45 

other  parties    12  5 


44  ECONOMICS  OF  COMMUNISM 

(a  county,  a  province,  a  group  of  provinces).  It  has 
control  of  the  enterprises  within  its  territory,  except 
those  which  are  directly  controlled  by  the  "glavki"  and 
the  "centers"  of  the  Supreme  Council. 

Under  the  regional  councils,  groups  of  similar  enter- 
prises are  brought  together  into  what  is  known  as  the 
"kusts."  Each  "kust"  is  headed  by  a  collegium  of  from 
five  to  seven  persons.  The  collegium  for  each  group 
consists  of  persons  proposed  by  a  conference  of  the 
trade  and  professional  organizations  of  the  section,  and 
chosen  by  the  regional  council  of  national  economy. 
One  third  must  represent  the  workmen  of  the  enter- 
prises involved,  one  third,  the  trade  and  professional 
unions,  and  one  third,  the  council  of  national  economy. 
Of  the  whole  number,  at  least  one  third  must  be  spe- 
cialists.* 

Finally,  each  factory,  foundry,  mine,  etc.,  in  short, 
each  industrial  enterprise,  has  its  own  management, 
consisting  either  of  a  collegium,  usually  made  up  of 
three  men,  or  of  a  single  individual,  a  director.  If  it 
is  a  collegium,  then  two  thirds  of  it  are  appointed  by 
the  local  council  of  national  economy  (if  the  enter- 
prise is  under  its  control),  or  by  the  Supreme  Council 
(if  the  enterprise  is  under  the  direct  control  of  the 
central  body).  The  other  third  is  elected  by  the  pro- 
fessionally organized  workmen.  One  third  must  con- 
sist of  specialists  from  among  the  technical  and  com- 
mercial employees  of  the  enterprise.  If  there  is  a  single 
director,  then  he  is  appointed  by  the  council  of 
national  economy,  but  has  an  assistant,  who  must  be 

*  Soviet  Yearbook,  loc.   cit.,   p.   134.     Also,  V.   Ivanov,    "The  Factory 
Committees,"  article  in  Petrograd  Pravda,  December  20,  1919. 


NATIONALIZED  PEODUCTION  45 

a  workman,  chosen  by  the  workmen.  The  factory 
management  is  by  no  means  autonomous.  The  nearest 
organ  of  control  has  a  right  to  appoint  its  representa- 
tive to  each  enterprise,  and  he  can  overrule  the  deci- 
sions of  the  factory  management. 

The  financial  control  of  industry  is  carried  on  by  the 
Department  of  State  Control,  which  is  a  part  of  the 
Government  proper,  rather  than  of  the  Supreme  Coun- 
cil. The  financing  of  the  enterprises  and  groups  of 
enterprises  is  done  through  the  special  credit  organs, 
created  by  the  Praesidiimi  of  the  Supreme  Council. 
Credit  is  extended  through  the  State  People's  Bank, 
and  consists  of  allowance  in  money  for  the  purpose  of 
paying  wages  and  purchasing  raw  materials.  Under 
this  system,  there  is  no  preliminary  financial  control, 
but  subsequent  inspection  by  the  State  Control  and  the 
trade  and  professional  unions. 

Credit  may  be  extended  also  to  non-nationalized 
enterprises.  Such  enterprises  are  divided  into  three 
classes:  first,  small  enterprises  run  by  private  indi- 
viduals, but  controlled  by  local  organs  of  councils  of 
national  economy;  second,  small  independent  organiza- 
tions, also  controlled  by  the  organs  of  the  councils; 
third,  home  or  group  productive  units,  "kustar"  groups, 
etc.,  not  controlled  by  the  councils.  Credit  may  be  ex- 
tended to  the  first  and  second  gi-oups,  and  the  financing 
is  done  through  the  organs  which  control  them.* 

Much  confusion  has  been  caused  by  the  uncertainty 
of  the  relations  between  the  "glavki"  and  the  regional 
councils  of  national  economy  when  questions  arose  con- 

*  Decision  of  the  Third  Congress  of  Councils  of  National  Economy, 
Ekonomicheskaya  Zhisn,  January  28,  1920. 


46  ECONOMICS  OF  COMMUNISM 

cerning  the  management  of  the  enterprises  which  are  a 
part  of  the  industry  controlled  by  the  given  committee 
of  the  Supreme  Conncil  of  National  Economy,  but  is 
found  on  the  territory  within  the  jurisdiction  of  the 
local  council  of  national  economy.  Two  decisions  were 
recently  taken  for  the  regulation  of  this  question. 

The  first  decision  was  in  the  matter  of  the  supply  of 
raw  materials  for  the  enterprises  run  by  the  committees 
of  the  Supreme  Council.  According  to  the  decision 
of  the  Central  Executive  Committee  of  the  Seventh 
Congi-ess  of  Soviets,  the  duty  of  providing  raw  mate- 
rials for  the  enterprises  run  by  the  "glavki"  devolves 
upon  the  regional  councils  of  national  economy,  acting 
in  cooperation  with  the  raw  materials  sections  of  the 
"glavki."  The  second  question  as  to  matters  of  juris- 
diction was  decided  by  the  Third  Congress  of  the  Coun- 
cils of  National  Economy,  held  in  January,  1920,  in 
favor  of  the  ^^glavki."  Commenting  on  this  last  deci- 
sion, a  Soviet  economist  *  says  that  the  watchword  in 
accordance  with  which  the  economic  work  of  Soviet 
Russia  in  the  domain  of  nationalized  production  now 
proceeds  is  as  follows: 

The  municipalization  of  local  and  less  important  industry, 
and  the  trustification  of  the  large  and  national  industry. 

In  other  words,  whenever  possible,  the  enterprises  of 
any  given  industry  are  united  into  a  tiiist  and  the  con- 
trol over  it  is  placed  in  the  hands  of  the  corresponding 
section  or  committee  of  the  Supreme  Council  of 
National  Economy.     When  such  merging  is  impossible^ 

•  D.  Shapiro  in  the  Ekonomicheskaya  Zhisn,  March  5,   1920. 


NATIONALIZED  PRODUCTION  47 

then  enterprises  remain  under  the  control  of  the  local 
councils  of  national  economy,  whose  jurisdiction  is 
purely  territorial. 

Thus,  the  general  trend  of  the  system  of  nationalized 
industry  is  in  the  direction  of  the  creation  of  as  many 
trusts  or  syndicates  as  there  are  industries,  and  the 
concentration  of  the  control  over  all  these  trusts  in  the 
hands  of  the  Supreme  Council  of  National  Economy, 
acting  as  an  agent  of  the  state.  This  Supreme  Council 
thus  becomes,  in  the  terminology  of  the  Soviet  econom- 
ists, a  ''trust  of  trusts." 

Many  Soviet  economists  consider  that  at  the  present 
time  one  of  the  great  weaknesses  of  the  nationalized 
system  of  production  from  the  point  of  view  of  unified 
control  is  the  parallelism  of  functions  that  exists 
between  the  Supreme  Council  of  National  Economy  and 
several  of  the  other  departments  of  Government.  The 
Commissariats  of  Finance,  Agriculture,  Trade,  Indus- 
try, Ways  of  Communication  all  have  functions  which 
are  entirely  identical  with  the  work  of  the  Supreme 
Council  of  National  Economy.  There  is  a  movement 
looking  toward  the  consolidation  of  all  the  branches  of 
the  Soviet  Government  having  functions  connected  with 
the  work  of  industrial  production  in  the  hands  of  the 
Supreme  Council  of  National  Economy,  which  would 
then  really  become  the  unifying  center  of  the  whole 
economic  life  of  the  country  so  far  as  its  industrial 
production  is  concerned.  Later  on,  it  is  expected  that 
the  Supreme  Council  would  take  over  also  the  control 
of  the  work  of  distribution  and  of  agTicultural  produc- 
tion. 


CHAPTER  III 


COOPERATIVE    DISTRIBUTION 


All  trade  and  commerce  were  nationalized  by  the 
decree  of  June  28,  1918.  This  meant  that  trade  was 
dechired  a  monopoly  of  the  state,  being  taken  out  of 
the  hands  of  private  individuals  and  placed  in  the 
hands  of  the  proper  department  of  Government.  Free 
trade,  in  the  sense  of  exchange  of  commodities  for  money 
at  prices  fixed  by  the  seller  or  arranged  by  the  buyer 
and  the  seller,  was  officially  abolished.  The  Government 
became  the  seller;  it  fixed  the  prices  and  arranged  the 
conditions  of  exchange.  Under  this  system  most  of  the 
stores  taken  away  from  their  former  owners  were  placed 
in  the  hands  of  local  Soviet  authorities,  mostly  munici- 
pal bodies.  Since  production  was  rapidly  diminishing, 
these  municipalized  stores  had  very  little  business  to  do, 
and  still  have  very  small  amounts  of  commodities  pass- 
ing through  them. 

However,  selling  in  the  cities  is  but  a  small  phase  of 
the  whole  process  of  distribution,  for  that  process  is 
national  in  its  scope.  And  in  an  agTicultural  country 
like  Russia,  the  main  problems  of  distribution  are  those 
concerned  with  the  exchange  of  commodities  between  the 
cities  and  the  villages.  The  Soviet  Government,  during 
the  first  period  of  its  existence,  i.  e.,  up  to  the  end  of 
1918,  found  no  way  of  handling  this  larger  phase  of 

48 


COOPEEATIVE  DISTEIBUTION  49 

the  problem  of  distribution.  Ordinarily,  particularly 
during  the  war,  much  of  this  trade  between  the  villages 
and  the  cities  was  carried  on  by  the  cooperative  organ- 
izations of  various  kinds.  Since  these  organizations  con- 
tinued to  function  during  this  first  period  of  the  Soviet 
regime  and  were  left  undisturbed,  they  became  practi- 
cally the  only  instrumentalities  of  exchange  on  a 
national  scale;  not  counting,  of  course,  the  various 
departments  of  Government,  which  carried  on  their  own 
operations  of  exchange,  particularly  in  the  matter  of 
obtaining  food  supplies.  But  these  governmental  activi- 
ties were  carried  on  upon  an  administrative  basis,  and 
not  upon  an  economic  one. 

The  cooperatives  were  not  the  only  institutions  of 
exchange  on  a  large  scale ;  for  there  grew  up  a  peculiar 
institution  of  exchange,  known  as  "spekulyatsia."  By 
this  word  is  meant  clandestine  trade,  in  which  the  seller 
arbitrarily  sets  the  price.  Free  trade,  officially  abol- 
ished by  a  Soviet  decree,  sought  this  channel,  and 
became  unregulated  exchange  of  commodities  on  an 
outrageously  profiteering  basis.  However,  "spekulyatr 
sia"  as  an  institution  of  economic  exchange,  although  it 
is  widely  practiced  and  universally  known,  has  no  offi- 
cial status  and  sanction,  and  therefore  cannot  be  con- 
sidered properly  as  a  part  of  the  Soviet  economic  system, 
when  we  deal  with  the  official  forms  of  this  system. 
It  should  be  more  justly  classified  as  a  result  of  the 
system,  and  will  be  considered  in  some  detail  when 
we  come  to  the  results  and  the  problems  of  the  system. 
In  the  meantime,  we  can  speak  only  of  the  cooperatives 
as  the  foi*ms  of  that  part  of  the  Soviet  economic  system 
which  deals  with  distribution. 


50  ECONOMICS  OF  COMMUNISM 

1.    The  Bussimi  Cooperative  Movement 

There  were  many  factors  in  the  economic  develop- 
ment of  Russia  during  the  past  few  decades  which  led 
to  a  rapid  and  extensive  growth  of  the  cooperative 
movement.  This  growth  was  particularly  rapid  during 
the  war,  when  the  whole  economic  apparatus  of  the 
country  was  put  under  a  great  strain.  JSTo  doubt,  the 
whole  movement  has  taken  such  deep  root  in  the  country 
as  a  natural  development  of  the  people's  traditional 
habits  of  gi'oup  work,  particularly  in  the  domain  of 
agriculture.  But  it  was  stimulated  by  the  weakness  of 
the  whole  economic  system,  which  developed  far  too 
slowly  to  satisfy  the  needs  of  the  country.  Every 
instance  or  period  of  economic  strain  served  as  a  stimu- 
lus for  development  along  the  lines  of  cooperation ;  and 
the  war  was,  naturally,  a  most  powerful  stimulus  of 
this  kind.  It  is  estimated  that  at  the  height  of  its  de- 
velopment (about  the  period  of  the  Revolution)  the  co- 
operative movement  affected  through  its  various  phases 
the  economic  activities  of  at  least  one  third  of  Russia's 
total  population. 

There  were  three  distinct  forms  of  cooperation  in 
Russia.  The  first  of  these  was  concerned  with  the  work 
of  distribution  proper,  i.  e.,  with  the  needs  of  consump- 
tion. The  whole  country  was  literally  covered  by  a  vast 
number  of  consumers'  cooperative  organizations,  which 
had  their  most  important  center  in  the  form  of  the  All- 
Russian  Central  Union,  known  as  the  "Centrosoyuz," 
organized  as  far  back  as  1898.  These  organizations 
carried  on  the  normal  functions  of  consumers'  leagues 
found  all  over  the  world,  except  that  they  were,  per- 


COOPERATIVE  DISTRIBUTION  51 

haps,  organized  on  a  mucli  more  extensive  scale  than  in 
any  other  country  and  phiyed  a  more  important  part 
in  the  whole  national  economy  of  Russia,  Mem- 
bership in  these  cooperative  societies  was  largely  a 
matter  of  payment  of  fees.  Their  work  extended  to 
various  phases  of  Russia's  economic  life,  gradually 
coming  to  embrace  them  all. 

The  second  form  of  cooperation  was  productive, 
rather  than  distributive  in  character.  Its  development 
was  due  to  precisely  the  same  causes :  lack  of  general 
economic  development  which  would  place  production 
on  a  large  scale,  and  the  traditional  habit  of  group  work, 
having  its  expression  in  the  "artel"  and  other  similar 
foiTus.  Productive  cooperation  grew  up  both  in  agTi- 
cultural  and  in  industrial  production;  naturally,  to  a 
much  larger  extent  in  the  former,  owing  to  its  prepon- 
derance in  the  whole  national  economy  of  Russia. 
While  it  encountered  many  difficulties  from  the  point 
of  view  of  efficient  management  and  technical  equip- 
ment, the  producers'  cooperative  societies  played  a  very 
important  role  in  the  economic  life  of  Russia.  Much 
of  what  is  generally  known  as  "kustar"  work  has  been 
cooperative  in  its  organization.  In  such  industries  as 
the  textiles  and  the  smaller  metal  work,  where  home  pro- 
duction without  extensive  technical  equipment  is  fea- 
sible, there  was  a  particular  growth  of  such  organiza- 
tions. And  in  agriculture,  of  course,  such  branches  as 
dairying  and  other  specialized  work  were  excellently 
fitted  for  the  development  of  producers'  cooperative 
societies.  They  also  had  their  large  unions,  covering 
great  areas.  The  most  famous  among  these  was  the 
great  Siberian  Union  of  Creamery  Associations. 


52  ECOI^OMICS  OF  COMMUNISM 

Closely  connected  with  these  producers'  cooperative 
societies,  was  the  third  form  of  the  cooperative  move- 
ment, viz.,  the  credit  and  loan  associations.  In  common 
with  the  other  phases  of  Russia's  economic  life,  the 
banking  system  of  the  country  was  poorly  developed 
and  was  not  sufficiently  extensive  territorially  to  supply 
the  financial  needs  of  the  whole  population.  Moreover, 
it  was  not  handled  with  a  sufficient  degree  of  favorable- 
ness  to  the  needs  of  the  smaller  producers.  As  a  result 
of  this  there  grew  up  a  very  important  and  financially 
powerful  network  of  cooperative  credit  and  loan  asso- 
ciations, again  serving  more  particularly  the  needs  of 
the  rural  population  in  its  productive  activities.  And 
here  again,  there  were  great  consolidating  centers,  the 
best  known  of  which  was  the  Moscow  People's  Bank. 

These  three  forms  of  the  cooperatve  movement 
remained  during  the  period  following  the  Revolution. 
But  it  was  natural  that  in  the  general  economic  condi- 
tions which  characterize  the  various  phases  of  the  post- 
revolutionary  period,  the  different  forms  of  the  coopera- 
tive movement  were  differently  affected  and  underwent 
changes,  irrespective  of  the  activities  of  the  Soviet 
Government.  And  of  course,  these  activities  of  the 
Soviet  Government  affected  all  the  phases  of  the  coop- 
erative movement,  though  in  different  ways. 

2.   Hie  Reorganization  of  the  Consumers'  Cooperatives 

The  Soviet  Government  saw  almost  from  the  begin- 
ning the  need  of  utilizing  the  consumers'  cooperative 
organizations  for  purposes  of  distribution.  Special 
sections  to  deal  with  matters  of  cooperation  were  early 


COOPEEATIVE  DISTKIBUTION  53 

organized  at  the  various  departments  of  Government, 
particularly  the  Commissariat  of  Agriculture  and  the 
Supreme  Council  of  National  Economy.  But  the  co- 
operative movement  as  a  whole  was  still  left  untouched, 
except  from  the  point  of  view  of  regulation  along  cer- 
tain lines. 

On  January  1,  1918,  there  were  in  Soviet  Russia 
about  twenty  thousand  consumers'  cooperative  organi- 
zations, uniting  about  seven  million  consumers,  l^early 
three  and  a  half  thousand  of  these  organizations  were 
united  in  the  All-Eussian  Union  of  Producers'  Coop- 
eratives, the  "Centrosoyuz."  These  organizations  still 
served  a  somewhat  limited  membership.  On  April  12, 
1918,  the  Soviet  Govei-nment  issued  a  decree,  by  which 
the  consumers'  cooperative  organizations  were  ordered 
to  extend  their  activities  to  the  whole  population  of  the 
territory  in  which  they  operated  by  revising  their  mem- 
bership fees,  making  them  smaller  for  the  poorer  por- 
tions of  the  population  than  for  the  richer.  By  the 
decree  of  August  8,  1918,  the  consumers'  cooperatives 
were  made  quasi-official  organizations.  This  decree 
ordered  a  compulsory  sale  of  grain  on  the  part  of  the 
peasants.  The  peasants  were  ordered  to  bring  their 
grain  to  designated  places,  where  they  would  receive 
payment  for  it.  The  "Centrosoyuz"  and  its  various 
branches  were  included  among  the  institutions  of  dis- 
tribution and  exchange  covered  by  this  decree.  In  ex- 
change for  the  grain  delivered  to  their  storehouses  by 
the  peasants,  these  cooperative  organizations  were  to 
pay  partly  with  money  and  partly  with  credit  orders 
on  cooperative  stores  in  the  vicinity.* 

•  Soviet  Yearhooh,  1919.     Article  on  "CoSperatlon." 


54  ECONOMICS  OF  COMMUNISM 

These  decrees,  however,  were  only  attempts  at  regu- 
lating the  activities  of  the  consumers'  cooperatives.  It 
was  at  the  beginning  of  1919  that  the  whole  con- 
sumers' cooperative  movement  was  entirely  reorganized 
and  placed  on  a  new  basis. 

This  reorganization  was  effected  by  the  decree  of 
March  20,  1919,  which  abolished  the  former  consumers' 
societies  and  substituted  for  them  "consumers'  com- 
munes," later  on  renamed  into  "workman-peasant  con- 
sumers' societies."  The  object  of  the  decree  was  to 
place  the  whole  distributive  cooperation  in  the  hands 
of  the  Soviet  Government  and  make  of  it  the  instru- 
ment of  distribution  on  a  national  scale.  For  this  pur- 
pose, all  distributive  functions  were  taken  out  of  the 
hands  of  the  various  governmental  supply  divisions  and 
handed  over  to  the  reorganized  cooperative  system. 

The  basis  of  the  new  consumers'  cooperation  is  a  net- 
work of  "workman-peasant  consumers'  societies,"  which 
must  cover  the  whole  country,  one  for  each  district. 
Within  its  territory,  the  consumers'  society  must  in- 
clude the  whole  "laboring"  population.  For  this  pur- 
pose, all  fees  and  membership  dues  are  abolished. 
Membership  in  these  societies  and  the  right  to  vote  in 
them  is  granted  in  accordance  with  the  provisions  in 
the  Soviet  constitution,  concerning  political  suffrage. 

The  principle  upon  which  the  cooperative  units  can 
unite  into  larger  bodies  was  also  radically  changed.  In 
its  pre-Communistic  form,  the  cooperative  movement 
consisted  of  separate  and  independent  units,  combining 
into  larger  associations  or  unions  without  losing  their 
identity  and  independence  and  delegating  to  these  larger 
bodies  only  definite  functions.     Under  the  new  plan, 


COOPEEATIVE  DISTEIBUTION  55 

hierarchical  subordination  is  introduced.  Local  coop- 
erative units  combine  into  regional  bodies;  regional 
bodies  are  united  in  provincial  bodies ;  provincial  bodies 
are  controlled  entirely  by  the  central  All-Russian  body, 
the  reorganized  ''Ceutrosoyuz." 

This  reorganization  encountered  much  opposition. 
The  objections  were  mainly  of  two  types.  In  the  first 
place,  it  was  asserted  that  in  effecting  this  reorgani- 
zation the  Soviet  Government  destroys  those  very  es- 
sentials of  initiative  and  enterprise  on  the  part  of  the 
masses  of  the  population  which  were  making  for  the 
rapid  and  extensive  development  of  the  whole  coopera- 
tive movement ;  and  that,  therefore,  the  new  measure 
goes  counter  to  economic  law.  The  second  type  of 
objections  was  concerned  with  the  apprehensions  lest 
the  reorganization  thus  effected  might  lead  to  a  total 
dissolution  of  the  cooperative  movement  in  the  general 
activities  of  goveramental  work  and  its  losing  all  power 
of  making  for  economic  progress,  particularly  from  the 
point  of  view  of  Socialistic  reconstruction  itself. 

The  Soviet  economists  took  cognizance  of  both  of 
these  types  of  objections.  They  dismissed  the  first  by 
terming  it  a  "remnant  of  the  old  bourgeois  cooperative 
idealogy."  But  they  considered  the  second  type  of 
objections  valid,  answering  them,  however,  by  restat- 
ing their  belief  in  the  general  efficacy  of  the  unified 
economic  plan.  Moreover,  to  those  responsible  for  the 
economic  leadership  in  the  Soviet  regime,  the  coopera- 
tive movement,  like  everything  else,  is  not  an  end  in 
itself,  but  only  a  means  to  an  end,  a  stepping  stone  to 
ultimate  social-economic  forms.     So  we  find  the  fol- 


56  ECONOMICS  OF  COMMUNISM 

lowing  formulation  of  the  role  of  cooperation  in  the 
economics  of  the  present  period  :* 

The  value  of  cooperation  Hes  in  the  fact  that,  in  the  first 
place,  it  makes  it  possible  to  draw  into  useful  work  layers 
of  population  still  taking  no  part  in  the  Soviet  movement, 
and  in  the  second  place,  that  in  an  epoch  of  centralized 
dictatorship,  it  makes  it  possible  to  place  the  purely  economic 
functions  of  serving  the  local  population  in  the  hands  of 
organizations  fitted  for  it,  thus  relieving  the  central  organs. 

The  cooperative  movement  is  a  road  toward  Social- 
ism; so  is  the  Soviet  movement.  And  since  the  second 
is  the  stronger  of  the  two,  it  must  assume  the  direction 
and  the  control  of  the  former.  This  is  the  spirit  and 
the  essence  of  the  whole  plan:  unified  control  and 
hierarchical  subordination. 

The  decree  of  March  20,  1919,  was  carried  out  very 
slowly.  It  meant  the  reorganization  of  the  local  units 
and  the  reelection  of  the  regional,  provincial  and 
central  bodies.  By  the  middle  of  May,  1920,  this 
work  of  reorganization  was  practically  completed  in  but 
twenty-five  Governments  of  Soviet  Russia,  f  But  it 
was  under  way  in  the  rest  of  the  country. 

3.     The  Brecbking-up  of  the  Credit  and 
Loan  Cooperatives 

The  decree  of  March  20,  1919,  reorganized  and  uni- 
fied the  consumers'  cooperation,  but  it  left  untouched 
the  other  two  forms  of  cooperation.     Their  turn  came 

*  Ekonomicheskaya  Zhisn,  March  20,  1920. 
t  Ibid.,   May   26,   1920. 


COOPEEATIVE  DISTRIBUTION  57 

about  a  year  later,  when  by  the  decree  of  January  27, 
1920,  the  credit  and  loan  cooperatives  were  broken  up 
and  the  producers'  cooperatives  subjected  to  a  new  set 
of  regulations,  determining  their  status  for  the  imme- 
diate future. 

By  January  1,  1920,  there  were  in  Soviet  Russia 
nearly  twenty  thousand  local  credit  and  loan  coopera- 
tive organizations,  united  into  over  two  hundred  unions. 
They  were  mostly  peasant  in  their  membership,  just 
as  they  were  before,  but  their  chief  functions  had  un- 
dergone very  important  changes  during  the  two  years 
that  had  elapsed  of  the  Soviet  regime. 

Originally,  the  really  important  function  of  the  credit 
and  loan  cooperative  organizations,  as  is  indicated  by 
their  name,  consisted  in  financial  operations  of  a  bank- 
ing character.  They  served  as  depositaries  for  the 
rural  population  in  many  parts  of  the  country,  financed 
their  individual  members  and  groups,  and  conducted 
other  operations  of  a  similar  character.  But  under 
the  Soviet  regime  they  found  it  impossible  to  carry 
out  these  functions.  Through  the  monopolization  of 
the  banking  system,  the  credit  and  loan  cooperatives 
lost  their  credit  functions  and  could  no  longer  perform 
their  work  of  financing  cooperative  enterprises.  Hav- 
ing lost  faith  in  many  of  its  former  habits,  the  peas- 
antry also  turned  away  from  its  practice  of  making 
deposits  with  the  credit  and  loan  societies.  At  the 
same  time,  the  abundance  of  money  in  the  villages  made 
loans  quite  unnecessary;  they  were  no  longer  sought. 

Having  lost  their  financial  functions,  the  credit  and 
loan  cooperatives  turned  their  attention  to  another  field 
of  activity,  which  had  formerly  constituted  one  of  its 


58  ECONOMICS  OF  COMMUNISM 

functions,  though  not  on  as  large  and  important  a 
scale  as  the  financial  operations,  viz.,  trade.  They  rap- 
idly became  institutions  of  trade,  assuming  functions  of 
distribution  entirely  analogous  to  those  of  the  con- 
sumers' cooperatives.  They  purchased  foodstuffs  from 
the  peasants  and  sold  them  to  the  various  departments 
of  the  Government,  which  was  forced  by  its  need  of 
food  supplies  to  accept  these  services  on  the  part  of  the 
cooperative  organizations  that  were  still  not  under  the 
Government's  control. 

But  as  the  decree  of  March  20,  1919,  was  carried 
out  more  and  more  effectively,  it  became  clear  that  the 
two  forms  of  cooperation,  the  reorganized  consumers' 
organizations  and  the  changed  loan  and  credit  organi- 
zations, were  performing  parallel  work.  Consequently, 
the  Government  decided  to  merge  them  together  into 
a  unified  system  of  cooperative  distribution.  This 
merging  was  the  object  of  the  decree  of  January  27, 
so  far  as  it  concerned  the  credit  and  loan  cooperative 
organizations. 

In  order  to  complete  the  carrying  out  of  the  decree 
of  March  20  and  to  carry  out  effectively  the  decree  of 
January  27,  a  new  administrative  body  was  created. 
It  is  known  as  the  Chief  Committee  on  Cooperation, 
and  is  officially  a  part  of  the  Commissariat  of  Supplies. 
It  consists  of  representatives  of  the  Commissariats  of 
Supplies  and  Agriculture,  the  Department  of  State 
Control,  the  Supreme  Council  of  National  Economy 
and  the  now  completely  reorganized  "Centrosoyuz." 
The  functions  of  the  Chief  Committee  on  Cooperation 
are  purely  administrative  and  do  not  extend  over  the 
direction  of  the  whole  system  of  cooperative  distribu- 


COOPEEATIVE  DISTRIBUTION  59 

tion,  which  is  in  the  hands  of  the  "Centrosoynz,"  of 
whose  functions  we  shall  presently  speak. 

The  Chief  Committee  on  Cooperation  acts  through 
its  local  organs,  the  composition  of  which  was  defined 
hy  a  set  of  Special  Rules,  issued  at  the  end  of  April. 
In  each  Government,  the  cooperative  department  of  the 
Provincial  Commissariat  of  Supplies  is  reorganized 
into  a  collegium  of  six :  two  representing  the  Commis- 
sariat of  Supplies:  two,  the  local  cooperative  forma- 
tions: one  each  for  the  provincial  Council  of  National 
Economy  and  the  Commissariat  of  Agriculture.  The 
actual  work  of  putting  into  effect  the  decrees  of  March 
20,  1919,  and  of  January  27,  1920,  is  in  the  hands  of 
these  local  hodies. 

The  reorganized  "Centrosoyuz,"  hy  virtue  of  the 
January  decree,  becomes  the  directing  center  of  the 
whole  hierarchically  arranged  system  of  cooperation. 
But  its  functions  pass  over  into  those  of  production 
through  the  second  part  of  the  same  decree,  concerning 
the  producers'  cooperative  organizations,  which  are  also, 
in  some  ways,  placed  under  its  control.* 

Jf..     The  Producers'  Cooperative  Organizations 

The  decree  of  January  27,  1920,  defined  the  status 
of  the  producers'  cooperative  organizations,  which  con- 
tinue to  play  a  very  important  part  in  the  economic 
life  of  Russia.     They  were  not  broken  up  in  the  manner 

*  Numerous  discussions  of  the  question  of  cooperation  are  found  in 
the  Ekonomicheskaya  Zhisn  all  through  1920.  Of  special  interest  are 
the  following :  interview  with  N.  N.  Krestinsky,  the  Commissary  of 
Finance,  March  6  ;  article  by  V.  Yakhontov,  February  20 ;  article  by 
Davydov,  July  17,  etc. 


60  ECONOMICS  OF  COMMUNISM 

of  the  credit  and  loan  organizations,  nor  were  they  sub- 
jected to  the  same  franlv  and  undisguised  control  of 
the  Government  as  the  consumers'  organizations.  An- 
other manner  of  treatment  was  applied  to  them.  And 
although  the  problems  which  the  producers'  cooperative 
movement  represents  are  essentially  problems  of  pro- 
duction and  should  properly  come  under  nationalized 
industrial  production  and  under  agriculture,  they  are, 
nevertheless,  so  bound  up,  at  least  for  the  time  being, 
with  the  system  of  cooperative  distribution,  that  it  is 
necessary  to  consider  them  in  the  present  connection. 

The  January  decree  left  the  local  units  of  producers' 
cooperation  ofBcially  autonomous.  But  it  ordered  the 
break-up  of  the  larger  consolidations  of  the  producers' 
cooperatives.  The  system  of  consolidation  followed 
out  by  the  producers'  cooperatives,  which  are  mostly  ag- 
ricultural in  character,  was  according  to  the  kind  of 
production,  constituting  unions  of  flax  gi'owers,  for  ex- 
ample, dairy  farmers,  etc.  The  various  All-Russian, 
or  sectional  Unions  of  this  kind,  in  the  opinion  of  the 
Soviet  authorities,  were,  however,  not  of  the  same  char- 
acter as  the  local  organizations  which  they  united.  On 
the  contrary,  they  were  taken  to  be  purely  trade  or 
distributive  in  character,  acting  as  agents  for  the  va- 
rious branches  of  production  which  they  represented, 
very  much  along  the  lines  of  the  credit  and  loan  asso- 
ciations of  the  post-revolutionary  period.  Hence  these 
sectional  and  All-Eussian  bodies  were  ordered  merged 
with  the  already  unified  consumers'  and  credit  and  loan 
cooperation,  all  under  the  complete  control  of  the  new 
"Centrosoyuz." 

The  Ninth  All-Russian  Congress  of  the  Russian  Com- 


COOPERATIVE  DISTRIBUTION  61 

munist  Party,  held  in  April,  1920,  confirmed  the  gen- 
eral policy  with  regard  to  the  cooperative  movement, 
expressed  in  the  March  and  January  decrees.  In  the 
Resolution  on  Cooperation,  the  Congress  emphasized, 
however,  the  need  of  stimulating  the  producers'  coop- 
eration, particularly  among  the  peasants. 

This  Resolution  lays  special  stress  on  five  important 
points,  which  show  very  clearly  the  attitude  towards  co- 
operation on  the  part  of  the  Communist  Party,  which, 
as  we  have  already  seen,  is  the  controlling  and  the  direct- 
ing center  of  the  whole  economic  mechanism  of  Soviet 
Russia.  First,  it  is  necessary  to  strengthen  the  posi- 
tion of  the  Communist  Party  in  all  organizations  of  the 
unified  cooperative  system  from  top  to  bottom.  Second, 
it  is  necessary  to  abolish  all  parallelism  in  the  work  of 
the  cooperatives  and  of  the  departments  of  Govern- 
ment proper,  by  concentrating  all  functions  of  distri- 
bution in  the  hands  of  the  fomier  and  all  functions 
of  industry,  forestry,  agriculture,  special  education, 
etc.,  in  the  hands  of  the  latter.  Third,  it  is  necessary 
to  utilize  as  widely  as  possible  the  cooperative  system 
for  the  purchase  of  food  supplies  and  other  products  in 
both  monopolized  and  non-monopolized  fields  of  pro- 
duction. Fourth,  the  cooperatives  should  be  compelled 
to  follow  out  entirely  all  the  directions  of  the  Soviet 
institutions.  And  fifth,  all  measures  should  be  taken 
for  the  stimulation  of  collective  production  with  as 
high  as  possible  a  degree  of  productivity  among  the 
peasants.  Following  out  these  directions  of  the  Party 
Congress,  the  Soviet  Government,  a  few  days  after  the 
Congress,  issued  a  new  decree,  supplementary  to  the 


63  ECONOMICS  OF  COMMUNISM 

decree  of  January  27  and  dealing  particularly  with 
the  producers'  cooperative  organizations.* 

According  to  this  supplementary  decree,  while  the 
consumers'  cooperative  organizations  must  embrace  the 
whole  population  of  the  given  district,  there  may  also 
be  organized  in  the  same  district  producers'  cooperative 
organizations,  embracing  parts  of  the  same  population. 
These  producers'  cooperatives  may  exist  either  inde- 
pendently of  the  consumers'  organizations,  or  as  au- 
tonomous sections  of  the  latter.  In  either  event,  they 
are  under  the  control  of  the  local  organ  of  the  Commis- 
sariat of  Agriculture  or  of  the  Council  of  National 
Economy,  with  which  they  must  register  their  statutes 
and  by-laws.  These  producers'  organizations  must 
imite  into  sectional  and  All-Russian  Unions  as  autono- 
mous sections  of  the  corresponding  unified  formations 
of  the  consumers'  cooperatives.  They  may  also  form 
other  Unions,  but  each  time  with  the  permission  of  their 
controlling  organ  of  Government  and  the  sanction  of  the 
Chief  Committee  on  Cooperation. 

The  producers'  organizations  are  administered  in- 
ternally in  accordance  with  their  own  statutes.  The 
sectional  organs  of  administration  consist  of  representa- 
tives from  the  local  bodies,  who  select  a  permanent 
board,  in  which  there  is  also  a  representative  of  the 
unified  cooperative  organ  for  the  given  territory  and 
of  the  corresponding  governmental  organ.  Each  one  of 
these  sections  is  thus  under  double  control.  Any  of 
its  decisions  may  be  abrogated  by  either  of  the  con- 
trolling   bodies;     decisions    of    politico-administrative 

*  Ekonomicheskaya  Zhisn,  April  22,  1920. 


COOPERATIVE  DISTRIBUTION  63 

character  may  be  abrogated  directly  by  the  controlling 
organ  of  the  unified  cooperation,  while  decisions  of 
economic  character  must  be  submitted  to  the  proper 
governmental  organ.  On  the  other  hand,  the  decisions 
of  the  controlling  bodies  are  binding,  if  they  do  not 
violate  the  autonomy  of  the  section.  Thus  the  officially 
autonomous  and  even  independent  producers'  coopera- 
tive organizations  are  subjected  to  the  strictest  control, 
and  the  conditions  of  their  official  "autonomy"  are  not 
defined  anyM'here. 

The  first  practical  step  tovv^ard  the  actual  consolida- 
tion of  this  system  was  tal^en  at  the  First  All-Eussian 
Congress  jf  the  "Centrosoyuz,"  held  in  Moscow,  July 
7-10,  1920.  At  this  Congress  the  new  permanent  board 
of  the  "Centrosoyuz"  was  elected,  consisting  of  one  rep- 
resentative of  each  provincial  "soyuz."  Leonid  Krassin 
heads  the  list  of  the  new  permanent  board.* 

In  its  purchasing  operations,  the  cooperative  system 
of  distribution  makes  use  of  both  money  and  credit 
checks  on  the  cooperative  stores,  the  use  of  money  being 
made  only  by  permission  of  the  State  Control.  This 
refers  particularly  to  payments  made  to  the  "kustars," 
peasants,  workmen,  etc.  All  other  payments  are  made 
by  transfers  of  banking  accounts,  without  any  money 
passing  hands.  All  money  received  by  the  cooperatives 
must  be  deposited  at  once  at  the  proper  banking  de- 
positaries. Only  enough  can  be  kept  in  cash  from 
day  to  day  to  cover  daily  expenses. 

•  Ekonomicheskaya  Zhisn,  July  13,  1920. 


CHAPTEE  IV 


THE  AGRAEIAN  SCHEME 


Both  from  tJie  point  of  view  of  fundamental  impor- 
tance in  the  national  economy  of  Rnssia,  and  from 
that  of  the  difficulties  encountered,  the  agi-arian  prob- 
lem is  the  most  serious  that  Communism  has  to  solve 
in  its  work  of  organization.  And  it  is  only  natural 
that  to-day  the  Soviet  leaders  can  show  least  in  the 
way  of  actual  achievement  in  the  work  of  organizing 
agricultural  production  and  devising  an  agrarian  scheme 
that  would  be  both  Communistic  and  efficient  from  the 
viewpoint  of  productivity. 

Here,  as  elsewhere,  at  least  two  important  stages 
have  already  been  passed  through  in  the  course  of  the 
existence  of  the  Soviet  regime.  The  first  stage  carried 
the  Soviet  regime  through  the  year  1918 ;  the  second 
began  early  in  1919  and  is  still  the  stage  in  which  the 
problem  is  to-day. 

Just  as  the  Soviet  regime  found  it  impossible  to  ap- 
ply to  the  work  of  distribution  the  same  methods  that 
it  had  applied  to  the  reorganization  of  industrial  pro- 
duction, so  it  found  that  neither  of  those  methods  of 
approach  were  feasible  when  dealing  with  the  agrarian 
problem.  In  industrial  production  there  was  already 
a  fair  degree  of  concentration  of  effort  and  control. 
jSTationalization,    applied   directly,   was  possible  there. 

64 


THE  AGRAEIAN  SCHEME  65 

The  state  simply  took  over  the  material  equipment, 
became  the  owner  and  the  manager  of  the  whole  mecha- 
nism of  production,  and  all  those  working  in  the  va- 
rious enterprises  became  its  employees.  With  distribu- 
tion these  tangible  forms  of  concentration  that  would 
be  more  or  less  all-embracing  were  lacking.  It  was 
necessary  to  create  them  through  a  radical  reorganiza- 
tion of  the  cooperative  system.  With  the  agrarian 
problem,  the  forms  of  concentration  that  may  be  found 
are  rudimentary  from  the  point  of  view  of  Socialistic 
development.  The  essentials  of  individualism  are 
strongest  here;  the  conditions  of  collectivism  least  de- 
veloped. Hence  the  difficulty  in  the  introduction  here 
of  that  centralization  and  unified  control  which  is  the 
keystone  of  the  whole  Sovet  economic  system. 

1.     Socialization  vs.  hidividualism 

The  first  stage  of  the  Soviet  work  in  the  construction 
of  agrarian  forms  is  characterized  by  the  enunciation  of 
the  basic  principle  of  socialization  as  an  outward  mani- 
festation, and  the  growth  of  the  spirit  of  individualism 
as  the  inner  manifestation. 

The  tactics  of  the  Bolshevist  revolution  and  of  the 
first  period  of  the  Soviet  regime  required  that  the  peas- 
antry be  kept  neutral.  An  experiment  in  Socialism 
was  to  be  attempted.  The  institution  of  private  prop- 
erty was  to  be  destroyed  once  and  for  all.  The  dictator- 
ship of  the  proletariat  was  to  be  the  instrument  by 
means  of  which  this  was  to  be  achieved.  But  the  mass 
of  the  population  is  peasantry;  not  as  active  as  the 
proletariat  by  any  means,  it  is  true,  but,  on  the  other 


66  ECONOMICS  OF  COMMUNISM 

hand,  imbued  with  the  ideas  of  property  and  individual 
ownership  of  its  principal  means  of  production,  the 
land.  In  order  that  the  city  could  be  left  free  to  carry 
out  its  experiment  in  the  dictatorship  of  the  proletariat, 
the  villages  had  to  be  put  into  such  a  frame  of  mind, 
as  to  be  at  least  indifferent  to  what  is  going  on  in  the 
cities;  for  their  active  support  was  impossible,  while 
their  active  opposition  would  have  proven  fatal. 

The  Bolshevist  leaders  found  a  way  out  of  this  dif- 
ficulty by  making  use  of  the  old  precept,  "Let  not  thy 
right  hand  know  what  thy  left  hand  doeth."  The  first 
land  decree  declared  that  all  land  would  be  given  to  the 
peasants  and  the  final  forms  of  the  solution  of  the  agra- 
rian question  would  be  left  to  the  Constituent  Assembly. 
After  the  dispersion  of  the  Constituent  Assembly,  on 
January  27,  1918,  a  decree  was  issued,  in  which  the 
fundamental  agrarian  principle  of  socialization  was 
enunciated.  By  socialization  was  meant  that  all  land 
was  declared  the  property  of  the  whole  people;  private 
ownership  to  land  was  abolished,  as  well  as  the  priv- 
ilege of  buying  and  selling  land.  This  was  the  action 
of  the  "right  hand" ;  so  much  the  Bolshevist  leaders 
owed  to  Communism. 

But  the  peasants  expected  land,  not  theory.  Their 
whole  interest  in  the  Revolution  was  the  possibility  of 
their  getting  more  laud  than  they  had  before.  The 
decree  of  socialization  provided  that  all  land  in  each 
given  district  should  be  divided  evenly  among  the 
actually  working  peasantry  in  the  district.  The  peasants 
immediately  proceeded  to  cut  up  the  non-peasant  lands 
in  order  to  carry  out  this  decision.  The  Central  Govern- 
ment interfered  very  little  with  this  anarchic  method 


THE  AGEAEIAN  SCHEME  67 

of  redistributing  the  land.  It  permitted  the  peasantry 
to  interpret  the  decree  of  socialization  as  meaning  that 
the  land  was  redistributed  among  them  to  be  owned  by 
thorn.  This  was  the  action  of  the  ''left  hand";  this 
the  Bolshevist  leaders  owed  to  the  exigencies  of  the 
moment,  the  need  of  keeping  the  peasantry  neutral. 

It  was  not  long  before  the  peasantry  began  to  realize 
what  had  really  happened.  The  army  and  the  cities 
rapidly  began  to  empty  into  the  villages  large  numbers 
of  men  who  had  formerly  left  the  villages  for  industrial 
centers  and  the  cities  proper  and  who  now  began  to  go 
back  to  share  in  the  new  land  benefits.  Added  to  the 
shiftless  and  the  landless  elements  always  found  in  the 
rural  districts,  these  new  elements  rapidly  formed  a 
new  and  important  stratum  of  the  village  population. 
While  not  powerful  numerically,  they  presented  excel- 
lent material  for  the  Soviet  system.  Proletarian  in 
character,  not  affected  by  property  traditions  which  are 
so  prominent  in  the  peasants  actually  working  their 
own  lands,  these  elements,  characterized  in  the  termi- 
nology of  Bolshevism  as  the  "village  poverty,"  became 
a  mobile  force  which  could  be  excellently  utilized  by 
the  regime. 

The  remainder  of  the  peasantry  was  divided  by  the 
Bolsheviki  into  two  classes,  the  rich  peasantry,  known 
as  the  "kulaki"  (the  fists),  and  the  middle  peasantry. 
Into  the  first  of  these  classes,  roughly  speaking,  were 
put  all  those  who  employed  labor  for  profit  in  the  work- 
ing of  their  lands;  while  into  the  second  class  were 
fitted  the  majority  and  the  bulk  of  the  whole  peasant 
class. 

The  "village  poverty"  found  itself  landless  and  face 


68  ECONOMICS  OF  COMMUNISM 

to  face  with  hostile  opposition  on  the  part  of  the  hard 
working  middle  peasantry.  But  it  had  on  its  side  the 
favor  and  the  assistance  of  the  Government.  For  pur- 
poses of  social  fermentation  in  the  midst  of  the  rural 
population,  the  Bolshevist  leaders  took  special  pains 
to  introduce  class  struggle  in  the  villages  by  pitting 
the  "village  poverty"  against  the  other  two  classes.  This 
resulted  in  interesting  conflicts  and  led  to  very  impor- 
tant consequences,  of  which  we  shall  speak  later.  But 
the  stimulation  of  this  class  war  in  the  villages  had  an 
important  influence  upon  the  work  of  creating  new 
airrarian  forms,  and  it  is  in  this  connection  that  the 
question  is  of  interest  to  us  at  the  present  stage. 

Finding  itself  in  a  precarious  position  in  spite  of 
the  special  privileges  conferred  upon  it  by  the  Gov- 
ernment through  the  creation  of  special  "committees 
of  poverty,"  of  which  we  shall  also  speak  later,  the  "'vil- 
lage poverty"  class  found  it  expedient  to  band  into  com- 
munes, get  land  by  force  when  other  means  failed, 
and  make  an  attempt  to  organize  agriculture  on  some- 
thing like  a  collective  basis.  This  commune  movement 
grew  largely  of  its  own  accord,  but  the  Soviet  leaders 
early  realized  its  importance  and  did  everything  in  their 
power  to  stimulate  it.  One  of  the  methods  of  doing 
this  was  to  make  conditions  of  work  very  difficult  for 
individual  middle  peasantry  through  the  Government 
control  of  seed,  agricultural  machinery,  etc.,  in  order 
to  force  the  middle  peasantry  to  join  the  communes. 
And  with  the  entry  of  the  middle  peasantry,  a  commune 
would  take  a  new  lease  on  life,  for  it  would  then  ac- 
quire the  technical  equipment  which  still  remained  in 


THE  AGRARIAN  SCHEME  69 

the  hands  of  the  industrious  and  hard-working  middle 
peasantry. 

The  growth  of  communes  was  not  rapid  by  any  means, 
because,  in  spite  of  all  difficulties  which  were  encoun- 
tered by  the  middle  peasantry  who  remained  outside, 
it  was  next  to  impossible  to  get  them  into  the  com- 
munes. By  the  fall  of  1918  there  were  about  five 
hundred  communes  on  the  territory  of  Soviet  Russia.* 
It  was  not  a  brilliant  showing,  of  course,  considering 
the  efforts  that  were  spent  in  the  stimulation  of  the 
commune  movement,  but  it  served  as  something  of  a 
foundation  for  the  Soviet  Government  in  its  next  steps. 

There  was  another  very  important  element  in  the  sit- 
uation which  also  was  utilized  by  the  Soviet  Govern- 
ment in  its  process  of  constructing  new  agrarian  forms. 
Some  elements  among  the  middle  peasantry  realized 
very  soon  that  the  long-awaited  and  long-expected  agra- 
rian reform  and  the  distribution  of  all  land  cannot  bring 
the  benefits  that  were  expected.  The  socialization  de- 
cree, officially  placing  the  whole  arable  area  at  the  dis- 
posal of  the  peasantry,  added  but  little  to  the  amounts 
already  held.  It  was  found  that  only  15,800,000  desia- 
tinas  were  available  for  distribution  in  the  twenty-two 
Governments  of  Soviet  Russia.  After  the  distribution, 
the  individual  peasant  holdings  were  increased  by 
scarcely  a  desiatina  each,  which  was  utterly  insuffi- 
cient, considering  the  low  stage  of  agronomic  devel- 
opment, f 

The  peasants  realized  the  advantages  of  large-scale 

*  Moscow  Izvestiya,  March  12,  1919. 

t  Report  of  Commissar  of  Agriculture  Sereda  to  the  Executive  Com- 
mittee, Moscow  Izvestiya,  February  12,  1919. 


70  ECONOMICS  OF  COMMUNISM 

agricultural  production,  and  they  saw  very  soon  that 
such  production  would  be  impossible  even  with  their 
new  holdings.  Then  they  began  to  apply  their  old 
methods  of  group  work,  which  they  had  learned  to  em- 
ploy from  time  immemorial.  Instead  of  going  into  com- 
munes, where  each  man  would  have  to  give  up  his 
worldly  possessions  into  the  common  fund,  some  of 
them  preferred  to  band  together  merely  for  purposes  of 
collective  work,  without  any  obligations  of  collective 
ownership. 

Embittered  by  the  class  war  introduced  in  the  vil- 
lages, strongly  opposed  to  the  commune  as  it  was  being 
introduced,  the  bulk  of  the  peasantry  was  strengthened 
still  more  in  its  desire  for  individual  control  of  land 
holdings.  Socialization  of  the  land  was  still  far  from 
meaning  to  them  what  it  meant  to  the  Communist  lead- 
ers. On  the  contrary,  their  readiness  to  accept  this 
latter  meaning  was  growing  less. 

By  the  end  of  1918  the  dictatorship  of  the  proletariat 
was  already  sufficiently  established  in  the  cities  to  per- 
mit the  Soviet  leaders  to  count  upon  it  for  a  police  and 
administrative  force.  They  now  found  themselves  in 
a  position  to  turn  their  attention  to  the  villages  and 
to  begin  in  earnest  the  introduction  of  Socialism  there, 
i.  e.,  the  construction  of  new  agrarian  forms.  The  ex- 
perience of  the  Soviet  regime  with  the  question  of  food 
supply  during  its  first  year  in  power  served  as  a  most 
powerful  stimulus  for  the  attention  which  its  leaders 
began  to  devote  to  the  agrarian  question.  The  sowing 
area,  the  crop  returns,  and,  particularly,  the  deliveries 
to  the  cities  decreased  so  much,  that  work  in  the  vil- 
lages became  absolutely  imperative. 


THE  AGEAEIAN  SCHEME  71 

The  whole  agrarian  work  of  the  Bolsheviki  during 
the  year  merely  ser\^ed  to  strengthen  the  spirit  of  in- 
dividualism among  the  peasantry.  The  Soviet  leaders 
decided  that  it  was  time  to  begin  the  translation  of 
socialization  into  Communistic  forms. 


2.     Communism  in  Agriculture 

The  first  serious  attempt  to  introduce  Communism 
into  agriculture  in  accordance  with  definite  plans  is 
found  in  the  decree  of  February  14,  1919,  entitled, 
"The  Regulations  Concerning  the  Socialistic  Agrarian 
Arrangement  and  the  Measures  for  Organizing  Agri- 
culture on  a  Socialistic  Basis."  * 

The  new  decree  restates  socialization  in  terms  of 
declaring  the  whole  arable  area  of  Soviet  Russia  a  single 
and  unified  land  fund,  the  administration  of  which  is 
placed  in  the  hands  of  the  proper  Commissariats  and 
the  local  organs  of  governmental  authority.  While  the 
land  is  still  left  almost  completely  in  the  hands  of  those 
who  till  it  as  individual  holdings,  it  is  pointed  out  that 
this  condition  is  merely  temporary  and  expedient,  and 
emphasizes  that  the  spirit  and  the  essence  of  the  new 
measure  is  to  provide  the  channels  through  which  this 
state  of  affairs  may  be  gradually  transformed  into  the 
state  demanded  by  Communism. 

The  aims  and  objects  set  for  the  present  period  are 
formulated  as  follows : 

•  The  text  of  this  decree  was  published  In  the  Izvestiya,  the  oflScial 
organ  of  the  Soviet  Government.  A  semi-official  interpretation  of  it 
for  popular  use  is  found  in  a  pamphlet  by  Kiy,  published  by  the  Com- 
missariat of  Agriculture. 


72  ECONOMICS  OF  COMMUNISM 

For  the  purpose  of  destroying  all  exploitation  of  man  by 
man;  of  organizing  rural  economy  on  the  basis  of  Socialism 
and  with  the  application  of  all  improvements  in  science  and 
technique;  of  educating  the  toiling  masses  in  the  spirit  of 
Socialism;  of  bringing  about  an  alliance  between  the 
proletariat  and  the  "village  poverty"  in  their  struggle  against 
capital,  it  is  necessary  to  pass  from  the  individualistic  forms 
of  land  exploitation  to  collective  forms.  Large  Soviet  estates, 
rural  communes,  group  agriculture  and  all  other  forms  of 
collective  use  of  the  land  are  the  best  means  for  achieving 
this  object,  and  therefore  all  forms  of  the  individiial  use  of 
the  land  should  be  regarded  as  merely  temporary  and  doomed 
to  destriiction. 

Such  are  the  immediate  aims  of  Communism  in  agri- 
culture. Tlie  ultimate  aims  are  formulated  no  less 
clearly : 

The  basis  of  the  agrarian  scheme  must  be  the  determina- 
tion to  create  a  single,  unified  rural  economy,  that  would 
supply  the  Soviet  Kepublic  with  the  gi-eatest  possible  amounts 
of  economic  benefits  with  the  least  possible  expenditure  of 
the  people's  toil.  In  conformity  with  this,  the  new  agrarian 
scheme  embraces  all  the  measures  of  technical  character, 
directed  toward  the  introduction  of  collective  principles  in 
the  use  of  land,  rather  than  the  individualistic  ones. 

For  the  time  being,  three  forms  of  collective  use  of 
the  land  are  introduced  by  the  decree  of  February  14. 
Two  of  these  foi-ms  are  purely  Connnunistic  in  char- 
acter. These  are  the  forms  of  Soviet  estates  and  the 
rural  communes.  The  third,  the  collective  agTicultural 
associations,  are  not  Communistic  in  character,  but  are, 
nevertheless,  welcomed  and  even  encouraged  by  the 
Soviet  regime  for  reasons  of  expediency.  Like  the  in- 
stitution of  the  individual  control  of  land  holdings,  this 


THE  AGRARIAN  SCHEME  73 

third  form  of  collective  land  use  is  also  considered 
temporary,  but  acceptable,  nevertheless.  The  Soviet 
leaders  are  frank  in  their  recognition  of  the  fact  that 
Communism  is  infinitely  more  difficult  to  introduce  in 
agriculture  than  in  any  other  phase  of  the  country's 
economic  life. 

3.     The  Soviet  Estates 

The  form  of  agrarian  Communism  which  approaches 
closest  to  that  of  nationalization,  the  acme  of  the  Com- 
munist vi^ork  in  the  construction  of  economic  forms,  is 
the  Soviet  estate.  In  confonnity  with  this,  the  Soviet 
estates  are  placed  in  a  privileged  position  as  compared 
with  the  other  forms.  Article  8  of  the  February  de- 
cree states  plainl}^,  that  the  land  fund,  which  is  the 
property  of  the  state, 

should  be  utilized,  first  of  all,  for  the  needs  of  the  Soviet 
estates  and  the  rural  communes;  then,  for  the  use  of  asso- 
ciations and  other  collective  forms ;  and  lastly,  for  the  use 
of  those  who  till  individual   holdings   for  their   own   use. 

The  fundamental  idea  underlying  the  system  of  Soviet 
estates  is  the  realization  of  the  need  of  reestablishing 
the  higher  forms  of  agriculture  which  were  made  pos- 
sible through  large-scale  production  on  estates,  formerly 
privately  owned  by  enlightened  landlords.  During  the 
anarchic  division  of  land  under  the  system  of  socializa- 
tion in  its  first  phases,  a  large  number  of  these  estates 
were  cut  up  by  the  peasants,  and  many  of  the  technical 
improvements  existing  there  were  destroyed. 

In  explaining  the  agrarian  policy  of  the  Soviet  Gov- 


74  ECONOMICS  OF  COMMUNISM 

ernment  with  regard  to  the  introduction  of  Communism 
in  agriculture,  the  Commissar  of  Agriculture,  Sereda, 
gives  the  following  as  the  two  aims  to  be  pursued  in  the 
work  of  the  Soviet  estates:  first,  to  build  up  model 
fanns  which  would  be  of  agronomic  assistance  to  the 
rest  of  the  rural  population;  and  second,  to  organize 
production  of  agricultural  products  on  a  rational  basis.* 
There  is,  of  course,  another  aim,  viz.,  to  introduce 
eventually  the  forms  of  nationalized  production  into 
agriculture ;  but  it  is  much  more  remote  than  the  other 
two. 

The  land  taken  over  for  Soviet  estates  is  exclu- 
sively that  which  was  formerly  held  by  large  land- 
owners, i.  e.,  the  best  land.  Greatest  attention  is  paid 
to  those  estates  upon  which  there  already  exist  (or  ex- 
isted at  the  time  of  the  Revolution,  though  now  par- 
tially destroyed)  such  improvements  as  gardens,  or- 
chards, gTape  arbors,  plantations  of  hojDS,  tea,  tobacco, 
sugar  beet,  cotton,  etc. ;  or  such  technical  equipment 
as  creameries,  mills,  wine-presses,  etc. ;  estates  on  which 
live  stock  raising  is  well  developed  along  the  lines  of 
cattle,  sheep  or  horse  raising;  estates  on  which  there 
are  shops  for  the  repair  of  agricultural  machinery, 
etc.  In  short,  all  those  estates  which  present  excep- 
tional value  from  the  point  of  view  of  agricultural, 
technical  or  semi-industrial  equipment,  should  be  trans- 
fonned,  immediately  or  eventually,  into  Soviet  estates. 
In  places  where  such  original  estates  had  been  cut  up 
by  the  peasantry,  efforts  should  be  made  to  reconstruct 
them  as  far  as  possible. 

•  Report  to  the  Executive  Committee,  cited  above. 


THE  AGEAEIAN  SCHEME  75 

While  the  chief  object  of  Soviet  estates  is  to  organize 
agricultural  production  on  a  large  scale  and  a  scien- 
tific basis,  very  serious  attention  is  paid  to  the  possibili- 
ties of  industrial  or  semi-industrial  development  in  con- 
nection with  them.  Article  35  of  the  decree  of  Febru- 
ary 14  provides  for  the  establishment  of  a  "Workmen's 
Committee  of  Assistance,"  which  can  send  its  rep- 
resentatives to  the  rural  districts  in  order  to  assist 
the  local  governmental  authorities  in  charge  of  the  ag- 
ricultural work  and,  particularly,  the  Soviet  estates, 
in  organizing  such  production.  This  is  done  in  order 
to  "apply  to  agi'iculture  the  experience  in  the  work  of 
organization  acquired  by  the  industrial  proletariat." 
It  is  intended  that  canning  factories,  packing  houses, 
and  even  bakeries  and  confectionery  factories  may  even- 
tually be  established  on  the  Soviet  estates. 

In  its  educational  aims,  the  system  of  Soviet  estates 
is  expected  to  serve  the  purposes  of  both  agronomic 
assistance  and  Conmiunistic  propaganda.  In  order  to 
render  agronomic  assistance,  experimental  stations, 
model  farms,  exliibitions,  agricultural  schools,  libraries, 
museums,  theaters  should  be  established  there.  The 
Soviet  estates  would  thus  gradually  become  transformed 
into  towns,  creating  their  own  proletariat.*  More^ 
over,  they  would  show  the  masses  of  the  peasantry  the 
advantages  of  large  scale  over  individual-farm  agri- 
culture, and  would  train  them  in  the  realization  of  the 
value  of  rural  communes  and  the  other  forms  of  Com- 
munism in  agriculture. 

The  average  size  of  a  Soviet  estate  is  not  very  large. 

•  This  point  is  given  considerable  prominence  in  Kiy's  pamphlet, 
mentioned  above. 


76  ECONOMICS  OF  COMMUNISM 

According  to  the  information  gathered  by  the  Commis- 
sariat of  Agriculture  at  the  time  when  the  decree  of 
February  14  was  issued,  covering  ten  Governments, 
the  average  size  of  a  Soviet  estate  was  three  hundred 
and  forty  desiatinas,  i.  e.,  about  eight  hundred  acres.* 

The  Soviet  estates  are  not  only  the  property  of  the 
state  (all  land  is  that,  by  virtue  of  the  decree  of  Feb- 
ruary 14),  but  are  managed  directly  by  the  state.  This 
management  is  in  the  jurisdiction  of  the  People's  Com- 
missariat of  Agriculture,  the  actual  management  on 
individual  estates  being  in  the  hands  of  individuals  or 
groups  placed  there  as  government  officials  through 
proper  channels.  The  work  on  the  estates  is  done  by 
men  employed  for  the  purpose,  whose  status  is  the  same 
as  that  of  workmen  in  the  nationalized  industrial  enter- 
prises: they  are  all  employees  of  the  state  and  receive 
wages  for  their  work. 

There  is  another  form  of  Soviet  estates,  which  is  some- 
what different  from  the  form  we  have  just  considered. 
A  decree,  issued  on  February  18,  1919,  supplementary 
to  the  decree  of  February  14,  provides  for  the  establish- 
ment of  Soviet  estates  by  groups  of  industrial  prole^ 
tariat.     This  decree  states  that 

associations  of  state  enterprises,  as  well  as  separate  state 
enterprises,  municipal  Soviets,  large  trade  and  professional 
unions  and  local  unions  have  a  right  to  receive  from,  the 
People's  Commissariat  of  Agriculture  for  temporary  use 
tracts  of  land  and  whole  estates,  eonfiscated  from  the  original 
owners  and  not  intended  for  distribution  for  individual  farm- 
ing, as  well  as  other  lands,  lying  unsown  and  unused  at  the 

*  Report  of  Commissar  Sereda,  quoted  above. 


THE  AGEARIAN  SCHEME  77 

time  that  the  request  for  them  is  made;  upon  such  tracts  of 
land,  the  proletarian  groups  concerned  should  organize  Soviet 
estates  for  productive  purposes. 

This  form  of  land  exploitation  is,  of  course,  one  of 
the  peculiar  developments  of  the  food  crisis  which  has 
been  growing  ever  more  acute  during  the  past  three 
years.  In  order  to  provide  for  themselves,  workmen 
in  many  enterprises,  as  well  as  groups  of  population 
in  the  cities,  began  to  make  attempts  to  till  lands  in 
their  vicinity  which  were  not  being  used.  The  decree 
of  February  18  was  merely  the  acknowledgment  of  an 
already  existing  fact.  After  the  movement  developed 
sufficiently,  the  Government  stepped  in  with  attempts 
to  regulate  it.  In  the  system  of  transportation,  for 
example,  over  three  thousand  groups  were  already  till- 
ing their  own  land  in  different  parts  of  the  country, 
devoting  it  mostly  to  truck  gardening,  before  the  Gov- 
ernment stepped  in  for  purposes  of  regulation.* 

Jf..     The  Rural  Communes 

The  second  form  of  Communism  in  agi'iculture, 
though  not  of  as  high  a  type  as  that  of  the  Soviet  estate, 
is  the  rural  commune.  We  have  already  seen  how  the 
communes  began  their  development  and  what  elements 
in  the  rural  population  served  as  their  basis.  The 
paragraphs  of  the  decree  of  February  14  which  took 
up  the  question  of  the  rural  communes  determined  more 
or  less  definitely  their  status  in  the  scheme  of  intro- 
ducing; Communism  into  agriculture. 

•  Ekodomicheskaya  Zhisn,  August  3.  1920. 


78  ECONOMICS  OF  COMMUNISM 

The  rural  communes  are  placed  in  conditions  of  great- 
er privilege  than  any  other  agi'arian  form,  except  the 
Soviet  estates.  The  best  lands,  as  we  already  noted, 
are  given  over  to  the  Soviet  estates.  The  next  best  con- 
stitute the  land  fund  out  of  which  communes  are  to  be 
formed.  Being  the  form  best  suited  for  the  poorer 
portions  of  the  population,  the  communes,  moreover,  are 
provided  with  very  tangible  assistance  on  the  part  of 
the  state.  A  special  fund  has  been  established  by  the 
Soviet  Government  for  the  purpose  of  rendering  finan- 
cial assistance  to  the  rural  communes.  This  Jfund  of  one 
billion  roubles  is  placed  in  the  hands  of  special  com- 
mittees in  each  province  and  is  administered  by  them. 
Loans  can  be  made  in  the  form  of  money,  or  of  agricul- 
tural machinery,  seed,  building  materials,  etc.  Tbese 
loans  can  be  repaid  either  in  money  or  in  food  prod- 
ucts, if  amounts  larger  than  those  subject  to  govern- 
ment requisition  are  produced.  The  extra  amounts 
of  food  products  are  then  accepted  by  the  Commissariat 
of  Supplies  at  "fixed"  prices.  But  in  order  to  receive 
assistance  from  the  fund,  the  commune  must  conduct 
its  work  in  accordance  with  the  same  plan  as  that  used 
by  the  local  Soviet  estate,  or,  if  there  are  no  Soviet 
estates  in  the  vicinity,  in  accordance  with  plans  ap- 
proved by  the  agTicultural  division  of  the  local  Soviet. 

The  difference  between  a  Soviet  estate  and  a  rural 
commune  lies  primarily  in  the  fact  that  the  first  is 
owned  by  the  state  together  with  its  whole  equipment, 
and  is  operated  by  the  state ;  while  the  second  owns 
its  own  equipment  and  conducts  its  own  operations, 
only  the  land  it  uses  being  the  property  of  the  state.     A 


THE  AGBARIAN  SCHEME  79 

Soviet  estate  is  a  state  organization,  while  a  rural  com- 
mune is  a  voluntary  association  of  its  members. 

A  Soviet  estate  is  worked  entirely  by  hired  labor. 
A  rural  commune  is  supposed  to  be  worked  entirely 
by  its  own  members.  Only  in  case  of  an  emergency, 
when  special  work  has  to  be  done  in  a  short  time,  can 
a  commune  employ  non-members,  paying  them  set  wages. 
The  products  of  a  Soviet  estate  are  entirely  the  prop- 
erty of  the  state,  the  expenses  of  operation  being  also 
borne  by  the  state.  In  a  coimnune,  the  members  are 
permitted  to  keep  certain  fixed  amounts  of  the  food 
products  they  produce  as  compensation  for  their  toil. 
The  rest  must  be  placed  at  the  disposal  of  the  state. 
Amounts  delivered  above  certain  norms  are  paid  for 
by  the  Government,  and  the  communal  "profits,"  ac- 
cording to  Article  70  of  the  decree,  "must  be  used  for 
the  improvement  and  extension  of  the  communal  es- 
tates." 

The  rural  communes  must  be  united  into  groups  ac- 
cording to  geographical  distribution,  by  "volost,"  county, 
or  province.  This  should  be  done  especially  by  com- 
munes which  carry  on  similar  type  or  work,  specializing 
in  grain,  vegetables,  fruit,  etc.  Each  commune  is  man- 
aged by  an  elective  council  of  three  to  five  persons. 
These  communal  councils  have  a  right  to  send  represen- 
tatives with  consultative  privileges  to  the  Commissa- 
riat of  Agriculture  and  its  local  bodies  for  the  purpose 
of  establishing  contact  with  the  administration  of  the 
Soviet  estates.  And  similarly,  the  Commissariat  and 
its  local  organs  may  send  their  representatives  to  the 
communal  councils. 


80  ECONOMICS  OF  COMMUNISM 

5.     The  Agricultural  Associations 

The  Soviet  leaders  realize  that,  in  the  immediate 
future,  at  any  rate,  neither  of  the  two  Communistic 
agrarian  forms  (the  Soviet  estate  and  the  rural  com- 
mune) can  embrace  the  masses  of  the  peasantry.  F.or 
the  form  of  Soviet  estate  makes  of  a  peasant,  who  is, 
traditionally,  a  farmer  and  an  individualist,  merely  an 
employee  of  the  state.  The  form  of  village  commune 
makes  the  peasant  give  up  all  his  habits  of  private 
ownership  and  individual  use,  which  constitute  the 
outstanding  result  of  this  tradition.  Yet  production 
on  a  large  scale  is  imperative,  and  so  the  Soviet  leaders 
are  willing  to  concede  to  the  masses  of  the  peasantry 
another  form  of  collective  land  exploitation  on  a  non- 
Communistic  basis.  This  third  form  is  the  voluntary 
agricultural  association,  which  is  of  many  different 
kinds.  Article  94  of  the  decree  of  February  14  de- 
fines an  agricultural  association  as  such  an  arrangement 
of  land  exploitation  in  which  "the  whole  community 
or  separate  groups  work  the  land  by  means  of  a  col- 
lective application  of  all  its  members  and  a  common 
utilization  of  the  means  and  instruments  of  production 
for  the  purposes  of  plowing  and  sowing  the  land,  gath- 
ering the  crops,  etc." 

The  difference  between  a  rural  commune  and  an  agri- 
cultural association  lies  in  the  fact  that  in  the  former 
all  means  of  production,  all  tools  and  machinery,  all 
buildings,  etc.,  are  owned  in  common  by  all  the  mem- 
bers, while  in  the  latter  each  member  has  his  own  prop- 
erty, which  he  merely  loans  to  the  association  for 
common  and  collective  work.     But   in  accepting  this 


THE  AGRAEIAN  SCHEME  81 

non-Communistic  form  of  collective  land  use  and  even 
extending  to  it  official  sanction  and  assistance  (parts 
of  the  billion-rouble  fund,  for  example,  may  be  de- 
voted to  helping  the  associations),  the  Soviet  Govern- 
ment, through  the  decree  of  February  14,  provides  for 
a  number  of  regiilations  of  a  very  important  character. 

A  village  community  may  decide  to  change  from  in- 
dividual-farm to  collective  form  of  agriculture  by  a 
majority  of  votes.  But  if,  vehen  the  question  is  voted 
upon,  only  a  minority  is  in  favor  of  the  change,  then, 
according  to  Article  97,  the  community  must  set  apart, 
in  one  place,  enough  land  to  make  up  the  per  capita  hold- 
ings of  the  minority,  and  allow  the  minority  to  organize 
an  agricultural  association  upon  this  land.  With  re^ 
gard  to  hiring  labor  outside  of  its  membership,  such  an 
agricultural  association  is  placed  in  the  same  condition 
as  a  rural  commune;  i.  e.,  it  can  hire  outside  labor 
only  in  special  instances. 

In  case  an  association  finds  that  its  own  machinery 
is  insufficient  for  its  work,  it  is  given  a  right,  by  Article 
108,  to  requisition  from  the  individual  farmers  such 
machinery  as  the  latter  own  and  do  not  utilize  in  full. 
And  here,  too,  class  distinctions  are  introduced  very 
prominently.  Article  115  provides  that  in  case  machin- 
ery or  live  stock  or  any  other  article  of  agricultural 
use  is  confiscated  by  an  association,  the  rich  peasants 
should  receive  no  compensation  at  all,  while  the  middle 
and  the  poorer  peasantry  should  be  paid,  the  price 
being  set  by  the  association  which  makes  the  requisi- 
tion, but  not  to  exceed  the  fixed  government  price  for 
the  article  in  question.     Temporary  use  of  implements, 


82  ECONOMICS  OF  COMMUNISM 

etc.,  may  also  be  paid  for;  although  such  compensation 
is  not  made  compulsory. 

Again,  at  the  time  of  the  organization  of  an  associa- 
tion, the  dues  which  have  to  be  made  by  its  members 
for  the  purchase  of  seed,  fertilizers,  etc.,  are  not  levied 
equally.  The  largest  amounts  are  paid  by  those  peas- 
ants who  are  better  to  do.  The  middle  peasantry  pays 
less.     And  the  poor  peasants  pay  nothing  at  all. 

The  products  of  an  association  are  divided  into 
several  parts.  First,  deductions  are  made  for  seed  for 
the  next  sowing,  for  the  maintenance  of  the  common 
live  stock,  the  purchase  and  repair  of  machinery,  etc. 
Then,  division  is  made  among  members  according  to 
norms  existing  for  the  whole  country  at  the  time  of  the 
division.  The  remainder  is  placed  at  the  disposal 
of  the  state,  as  with  the  other  collective  groups. 

Each  association  is  managed  by  a  committee,  usually 
consisting  of  three  members,  elected  by  the  whole  as- 
sociation. The  committee  is  under  the  control  of  the 
local  division  of  the  Commissariat  of  Agriculture. 
The  association  has  a  right  to  punish  its  members  for 
refusal  to  work  and  other  offenses.  The  punishment 
may  consist  in  fines  or  even  expulsion  from  the  asso- 
ciation. 

The  land,  not  worked  by  Soviet  estates,  rural  com- 
munes and  agricultural  associations,  is  divided  among 
the  rest  of  the  peasantry  in  the  form  of  individual 
holdings,  ''loaned"  to  them  by  the  state.  The  impor- 
tance which  these  various  forms  play  in  the  agrarian 
scheme  of  Kussia  may  be  seen  from  the  following  state- 


THE  AGEAEIAN  SCHEME  83 

ment  made  by  the  Commissar  of  Agriculture  Sereda 
at  the  beginning  of  January,  1920  :* 

According  to  the  figures  at  our  disposal  for  the  thirty-one 
provinces  of  Soviet  Russia,  the  total  amount  of  land  that 
was  formerly  owned  by  those  who  did  not  actually  work  on 
it,  is  (exclusive  of  lorests)  24,151,000  desiatinas.  Of  this 
land,  20,798,000  desiatinas,  or  86  per  cent,  have  been  taken 
over  by  the  peasantry  as  individual  holdings;  9  per  cent  has 
been  given  over  to  Soviet  estates;  2y2  per  cent  have  been 
taken  oyer  by  rural  communes  and  agricultural  associations; 
and  2^/2  per  cent  have  been  given  over  to  various  govern- 
mental institutions. 

If  we  add  the  amount  taken  over  by  the  peasantry 
into  individual  holdings  to  the  amount  of  land  already 
held  by  them  under  the  same  arrangement,  we  shall  see 
very  clearly  how  small  has  been  the  progress  of  Com- 
munism in  agi'iculture,  in  spite  of  the  very  extensive 
agrarian  scheme  created  by  the  decree  of  February  14, 
1919. 

*  Petrograd  Izvestiya,  January  14,  1920. 


PART     TWO 
THE  RESULTS  AND  THE  PROBLEMS 


CHAPTER  I 


TRANSPORTATION 


The  question  of  transportation  is  the  central  and  the 
most  important  single  economic  problem  in  Russia.  Its 
importance  has  been  equally  great  under  all  three  of 
the  political  regimes  through  which  Russia  has  passed 
in  recent  years.  But  its  paramount  importance  to-day 
is  enhanced  by  the  fact  that  the  whole  transportation 
system  of  Russia  has  suffered  great  disorganization 
through  the  war,  the  republican  period  of  the  Revolu- 
tion, and  particularly,  through  the  Communist  period. 
During  the  past  three  years,  the  transportation  situa- 
tion, particularly  as  far  as  the  railroad  system  is  con- 
cerned, has  been  rapidly  growing  worse,  approaching 
truly  catastrophic  conditions. 

1.     The  Normal  Railroad  Situation 

Even  before  the  war,  the  Russian  railroad  situation 
was  a  matter  of  concern  for  the  forward  looking  eco- 
nomic elements  of  the  country.  The  trouble  lay  both 
in  the  inadequate  development  of  the  system  and  in  the 
insufficiently  rapid  pace  in  the  attempts  to  overcome 
this  inadequacy. 

Russia  was  behind  practically  every  civilized  country 
as    far    as   her   railroad    development   was   concerned. 

87 


88  ECONOMICS  OF  COMMUNISM 

This  lack  of  development  is  particularly  clear  if  we 
make  a  comparison  with  the  United  States,  the  only 
other  country  of  great  railroad  distances.  In  1913, 
the  United  States  had  4.3  kilometers  of  railways  for 
every  100  sq.  kilometers  of  territory,  or  41.8  kilo- 
meters for  every  10,000  inhabitants.  In  1914,  Russia 
had  1.06  kilometers  of  railways  for  every  100  sq.  kilo- 
meters of  territory  in  European  Russia  and  0,07  kilo- 
meters in  Asiatic  Russia,  or  4.1  kilometers  for  every 
10,000  inhabitants  in  European  Russia  and  5.8  kilo- 
meters in  Asiatic  Russia. 

The  Imperial  Government  had  a  plan  of  railroad 
construction  which  called  for  the  building  of  six  thou- 
sand versts  of  railroad  lines  annually.  This  plan,  how- 
ever, even  if  carried  out  in  full,  was  considered  inade- 
quate by  specialists ;  it  was  pointed  out  that  traffic  on  the 
Russian  roads  increased  normally  at  the  rate  of  seven 
per  cent,  a  year,  while  the  extension  planned  by  the 
Government  correspond  to  only  a  five  per  cent,  increase. 
In  any  event,  even  the  original  plan  could  scarcely 
have  been  carried  out  until  after  the  war,  although 
the  war  itself  showed  plainly  the  woeful  lack  of  trans- 
portation facilities.  During  the  first  stage  of  the  war 
there  was  considerable  railroad  construction.  Much 
work  was  done  on  double-tracking  the  Siberian  and  the 
Archangel  lines,  needed  for  carrying  war  supplies.  A 
great  deal  of  construction  was  done  at  the  front.  An 
entirely  new  line,  connecting  Petrograd  with  the  Mur- 
man  coast,  was  built. 

The  lack  of  railroad  lines  was  not  the  only  difficulty 
which  confronted  Russia  in  the  railroad  situation  dur- 
ing the  war.     The  lack  of  rolling  stock  was  even  more 


TEANSPOETATION"  89 

important.  There  was  a  shortage  of  both  cars  and 
locomotives  that  began  to  be  felt  when  the  war  began, 
and  grew  worse  as  the  war  progressed.  For  example, 
early  in  1917,  in  order  to  increase  traffic  at  the  front, 
the  Trans-Siberian  traffic  was  reduced  by  a  daily  sac- 
rifice of  two  trains.  But  the  result  of  this  was  that 
Vladivostok  became  rapidly  overloaded.  At  the  same 
time  a  shortage  of  munitions  began  to  be  felt ;  so  in  May 
seven  hundred  locomotives  were  placed  on  the  Siberian 
line.  And  this  immediately  resulted  in  the  reduction 
of  foodstuffs  brought  to  the  front,  so  that  many  sectors 
had  to  starve. 

During  the  war,  efforts  were  made  to  increase  the 
rolling  stock  of  the  Russian  railways.  Large  orders 
were  placed  abroad,  particularly  in  America.  The 
Russian  car  and  locomotive  works  tried  to  raise  their 
production  as  much  as  possible.  By  the  beginning  of 
the  Revolution  the  Russian  railroad  system  consisted 
of  about  60,000  versts  of  track ;  approximately  500,000 
cars  of  all  descriptions  (7  per  cent,  of  which  were  dis- 
abled), and  20,000  locomotives  (24.7  per  cent,  dis- 
abled).* This  situation  may  be  considered  as  fairly 
normal. 

The  Revolution,  even  the  first  stage  of  it,  affected 
the  whole  economic  life  of  Russia,  including,  of  course, 
the  railroad  system.  The  proportion  of  disabled  roll- 
ing stock  began  to  increase  with  what  then  appeared 
to  be  an  alarming  rapidity.  The  question  of  develop- 
ment   and    improvement    was    rapidly    pushed    to   the 

•  Article  on  Transportation  in  the  Soviet  Yearbook,  Moscow,  1919. 
It  is  interesting  to  note  that  statistics  published  in  other  official  Soviet 
publications  give  the  percentage  of  the  disabled  locomotives  at  this  time 
as  only  about  20    (see  Table  No.   3). 


90  ECONOMICS  OF  COMMUNISM 

background.  A  much  more  pressing  problem  arose, 
that  of  preserving  what  still  remained  of  the  railroad 
apparatus.  Railroad  specialists  considered  that  by 
the  fall  of  1917  the  railroad  traffic  would  have  become 
reduced  to  such  an  extent,  that  practically  all  trans- 
portation would  come  to  a  standstill.  Then  came  the 
Bolshevist  revolution  and  the  establishment  of  the 
Soviet  regime.  The  economic  disorganization  of  Rus- 
sia proceeded  at  an  increasingly  rapid  pace.  The  rail- 
road system  felt  this  much  more  acutely  than  most 
of  the  other  branches  of  industry.  What  the  special- 
ists of  the  first  period  of  the  Revolution  considered 
as  a  catastrophe,  began  to  look  like  paradise  compared 
with  the  state  of  affairs  at  the  height  of  this  process 
of  disorganization. 

2.     The  Situation  by  the  End  of  1919 

By  the  end  of  1919  and  the  beginning  of  1920,  the 
railroad  situation  reached  its  acutest  stage  of  disor- 
ganization. The  process  by  means  of  which  this  sit- 
uation was  brought  about  may  best  be  seen  from  the 
following  set  of  tables.* 

The  total  length  of  railroad  lines  varied  very  con- 
siderably during  the  six  years  which  elapsed  from 
the  beginning  of  the  war,  especially  after  1917,  when 
the  war,  the  Revolution,  and  the  civil  war  became  the 
determining  elements  in  the  whole  Russian  situation. 
Table  No.  1  indicates  these  variations : 

*  The  data  contained  in  Tables  Nos.  1,  2,  3,  4,  and  5,  as  well  as  the 
other  statistical  data  given  here  concerning  the  railroad  situation 
before  and  during  the  war,  are  taken  from  a  study  of  the  Russian  rail- 
road conditions  by  I.  Mikhailov,  a  Soviet  transportation  expert,  pub- 
lished in  the  Ekonomicheskaya  Zhisn,  March  7,  1920. 


TEANSPOETATION  91 

Table  No.  1 
The  Total  Length  of  R.R.  Lines  (in  versts) 

1914   64,000 

1915   65,000 

1916 65,000 

1917  64,000  January  50,000  December 

1918 53,000        "  23,000 

1919 23,000        "  36,000  " 

1920 48,000 

It  must  be  remembered  that  these  figures  indicate 
the  situation  from  the  point  of  view  of  the  Central 
Government  and  refer,  therefore,  to  those  railroad 
lines  which  are  under  its  control.  The  end  of  1918 
and  practically  the  whole  of  1919  represent  the  pe- 
riod of  the  greatest  development  of  the  civil  war,  when 
the  territory  under  the  control  of  the  Soviet  Gov- 
ernment was  the  smallest.  Similarly,  the  amounts 
of  the  rolling  stock  at  the  disposal  of  the  railroads 
controlled  by  the  Central  Government  would  also  vary 
with  the  fortunes  of  the  civil  war. 

In  1914  there  were  20,057  locomotives  on  all  of 
Russia's  railroad  lines.  Of  these,  the  government- 
owned  railroads  had  15,242;  the  privately-owned  roads 
had  4,616;  and  the  several  small  lines  in  Asia,  classi- 
fied separately,  had  199.  The  number  of  passenger 
locomotives  was  3,823 ;  the  number  of  freight  locomo- 
tives was  16,234.  Classified  according  to  the  fuel 
used,  there  were  15,047  coal-buming  engines;  4,072 
that  used  oil;  and  938  that  used  wood.  Taken  ac- 
cording to  their  age,  these  k)comotives  were  as  follows: 
over    fifty    years,    147;    forty   to   fifty   years,    1,535; 


93  ECONOMICS  OF  COMMUNISM 

thirty  to  forty  years,  2,083 ;  twenty  to  thirty  years, 
1,247;  ten  to  twenty  years,  7,937;  under  ten  years, 
7,108. 

Until  the  war  Russia  had  a  system  of  permanent 
crews  on  the  locomotives.  It  was  estimated  that  un- 
der this  system,  when  the  same  crew  has  charge  of  a 
locomotive  for  a  more  or  less  extended  period  of  time, 
the  engine  has  a  much  longer  life,  than  if  the  crew 
would  be  often  changed;  the  figures  being  twenty-five 
years  in  the  first  case  and  twelve  years  in  the  second. 
During  the  war,  the  Russian  railroad  administration 
gave  up  the  system  of  permanent  crews. 

The  increase  in  the  number  of  locomotives  since 
the  beginning  of  the  war  is  shown  in  Table  Ko.  2, 
which  indicates  how  few  locomotives  were  imported 
from  abroad  as  compared  with  the  number  built  in  the 
Russian   locomotive  works. 

Table  No.  2 
Increase  in  the  Number  of  Locomotives  during  the  War 

Year       Built  in  Russia        Imported  Total 

1914 816  —  816 

1915 903  —  903 

1916 599  400  999 

1917 396  375  771 

1918 191  *  191 

1919 85  —  85 


3765 


•  An  order  was  placed  in  the  United  States  for  2,000  locomotives,  a 
few  of  which  were  delivered  to  Vladivostok.  Total  number  of  deliveries 
unknown. 


TRANSPOETATION 


93 


Under  what  is  considered  nonnal  conditions,  the 
number  of  disabled  locomotives  should  not  exceed  ap- 
proximately twenty  per  cent,  of  the  total  number. 
Up  to  the  Kevolution,  the  number  of  disabled  locomo- 
tives was  kept  steadily  well  under  this  figiire.  Table 
No.  3  shows  the  percentage  of  disabled  locomotives 
by  the  month  for  the  years  1914-1920. 


Table  No.  3 
Percentage  of  Disabled  Locomotives 


1914 


1915 

1916 

1917 

1918 

1919 

1920 

16.8 

16.5 

31.1 

47.7 

58.1 

17.0 

18.4 

35.0 

49.5 

59.2 

CO 

17.3 

20.3 

35.3 

52.4 

1 

16.9 

20.6 

36.5 

52.8 

lO 

17.0 

22.4 

38.1 

52.5 

16.3 

24.2 

39.5 

49.0 

16.8 

24.7 

40.0 

48.5 

16.8 

17.1 

25.0 

41.0 

51.8 

16.3 

17.0 

24.8 

41.5 

51.5 

15.5 

16.5 

25.8 

43.1 

52.2 

16.4 

16.3 

27.4 

45.5 

53.7 

16.2 

16.8 

29.4 

47.8 

55.4 

January  .  < 
February  , 
March  .  . . 
April  .... 

May , 

June   .... 

July  

August   .  . 
September 
October    . , 
November 
December 


The  rapid  decrease  in  the  number  of  locomotives 
actually  in  running  order  may  be  seen  even  more 
clearly  from  Table  No.  4,  which  shows  the  total  num- 
ber of  such  locomotives  for  the  same  period. 

As  far  as  the  cars  are  concerned,  the  situation  was 
never  as  acute  as  it  was  with  the  locomotives.  It 
has  already  b{!en  said  that  just  before  the  Revolution, 
at  the  beginning  of  1917,  when  the  percentage  of  the 
disabled  locomotives  was  already  as  high  as  24.7  (about 


94  ECONOMICS  OF  COMMUNISM 

Table  No.  4 

Number  of  Locomotives  in  Running  Order 

1914 17,000 

1915 16,500 

1916 16,000  January  16,800  December 

1917 17,012        "         15,910  " 

1918 14,519         "  4,679 

1919 4,577        "  4,141 

1920 3,969 

20%  according  to  Table  No.  3),  the  percentage  of 
disabled  cars  was  only  about  7.  The  number  of  dis- 
abled cars  continued  to  increase,  but  it  never  reached 
the  same  proportion  as  with  the  locomotives.  Table 
No.  5  shows  this. 

Table  No.  5 

Number   of  Locomotives   and  Cars  in  Running    Or-der  for 
every  100  Versts  of  Operating  Lines 

Year  Locomotives  Cars 

1916 26     28  799     852 

1917 25     32  702     1106 

1918 20     27  828     1151 

1919 19   (Jan.)     11  (Dec.)  804  (Jan.)       604  (Dec.) 

1920, . . .   8        "  395 

Thus  while  the  minimum  number  of  locomotives 
in  running  order  decreased  during  this  period  by  three 
times,  the  minimum  number  of  cars  decreased  during 
the  same  period  only  twice.  In  other  words,  while 
the  whole  rolling  stock  situation  is  menacing  and  im- 
portant, the  question  of  locomotives  still  continues, 
as  during  the  war,  to  be  of  greater  concern  than  that 
of  cars. 


TEANSPOETATION  95 

Finally,  in  order  to  get  a  clear  picture  of  the  rail- 
road situation  in  Soviet  Kussia  at  the  beginning  of 
1920,  let  us  look  at  Table  No.  6,  which  is  a  summary 
of  the  condition  of  the  railroads  under  the  control  of 
the  Soviet  Government  during  the  last  week  of  Janu- 
ary, 1920. 

Table  No.  6 

Condition    of   Russian   Railways    during    the    Period   from 
January  22  to  February  1,  1920* 

A. 

Total  number   of  locomotives .9,639 

In  running  order 3,925      (40.Y%) 

Disabled    5,714     (59.3%) 

In  repair   2,705 

Awaiting  repair   3,009 

Repaired  during  the  period   176 

B. 

Total  number  of  freight  cars 237,980 

"  tank  "     14,643 

In  repair  and  awaiting  repair 54,537     (21.6%) 

Repaired  during  the  period   655 

The  Soviet  authorities  realized,  of  course,  the  truly 
tragic  nature  of  the  situation  that  was  thus  rapidly 
being  brought  about.  The  railroad  specialists  feared 
disaster  in  1917  and  1918.  But  their  calculations 
were  based  on  the  needs  of  traffic  which  under  the 
Soviet  regime  soon  lost  their  character  of  practically 
irreducible  minima.  The  whole  level  of  civilized  life, 
which  for  its  maintenance  makes  certain  demands 
upon  a  country's  system  of  transportation,  was  brought 

•  Elconomicheskaya  Zhisn,  March  7,  1920. 


96  ECONOMICS  OF  COMMUNISM 

down  in  Russia  under  the  Soviet  regime  to  the  phases 
of  almost  primitive  development.  Such  needs  as  still 
continue  to  press,  almost  exclusively  those  of  food  and 
fuel,  continued  to  be  satisfied  in  some  degree  by  the 
apparatus  of  transportation  that  still  remained.  But 
by  the  end  of  1919  it  began  to  be  clearly  seen  that 
even  these  traffic  requirements,  reduced  as  they  were 
almost  as  far  as  could  be,  would  soon  be  impossible 
of  satisfaction,  if  things  would  continue  to  run  in 
the  same  way  as  they  had  been  running  during  the 
preceding  years.  At  the  beginning  of  1920  the  Soviet 
Government  turned  its  attention  particularly  to  the 
question  of  transportation. 

3.     The  Methods  of  Cheching  the  Disorganization 

In  December,  1919,  when  the  number  of  disabled 
locomotives  had  already  reached  fifty-five  per  cent, 
the  Technical  Division  of  the  People's  Commissariat  of 
Ways  of  Communication  expected  that  by  March  the 
number  of  disabled  locomotives  would  be  seventy-five 
per  cent,  of  the  total  number.  This  would  mean  that 
in  March  it  would  be  possible  to  furnish  only  fifty 
per  cent,  of  the  absolutely  minimum  requirements  of 
locomotives,  whereas  in  December  it  was  still  possible 
to  furnish  eighty-four  per  cent.* 

The  locomotives  requiring  repair  are  divided  into 
three  categories,  according  to  the  kind  of  repair 
needed,  viz.,  major  repair,  minor  repair,  and  current 
repair.  Under  normal  conditions  the  time  required 
for  a  locomotive  to  pass  through  major  repair  is  about 

•  U.  Larin,  in  Moscow  Pravda,  March  21,  1920. 


TRANSPORTATION  9? 

three  months.  In  1916  the  time  for  major  repair 
was  117  days;  in  1917  it  was  201;  in  1918,  275. 
Minor  repair  required  in  1916  30  days;  in  1917, 
44  days;  in  1918^  76  days.*  In  1919  these  periods 
of  repair  became  still  longer.  With  over  five  thou- 
sand locomotives  and  fifty-four  thousand  cars  requir- 
ing repair,  the  pace  with  which  this  w^ork  of  repair 
proceeded  at  the  end  of  1919  may  be  seen  from 
Table  No.  7. 

Table  No.  7 

Data  Gathered  hy  the  Commissariat  of  Ways  of  Communica- 
tion C oncerning  Railroad  Repair  f 

Month  and  year  Locomotives  Cars 

Major  Minor  Current  Passenger  Freight 

November,  1919   16         189         691  580  1092 

December,     "    16         177         924  511  1229 

January,  1920 7         115        652  187  431 

One  of  the  chief  reasons  advanced  for  the  expla- 
nation of  the  slowness  with  which  railroad  repair  was 
being  done  was  the  lack  of  spare  parts,  which  would 
facilitate  and  accelerate  repair.  Other  reasons, 
equally  important,  were  the  shortage  of  fuel  and,  par- 
ticularly, the  lack  of  skilled  labor  and  the  loss  of  labor 
discipline.  I 

In  December,  1919,  a  series  of  measures  for  over- 
coming these  difficulties  was  devised  by  the  War  Rev- 
olutionary Council  in  conjunction  witli  the  Supreme 

*  Soviet  Yearbook,  loc.  cit. 

t  Ekonomicheskaya  Zhisn,  March  21,  1920. 

t  Report  of  Chairman  Kakabadze  of  the  Petrograd  Extraordinary 
Commission  for  Railroad  Repair  to  the  Council  of  National  Economy 
of  the  Northern  Region,  Petrograd  Pravda,  January  13,  1920. 


98  ECONOMICS  OF  COMMUNISM 

Council  of  Transportation.  The  basis  of  these  meas- 
ures was  an  idea,  proposed  by  a  member  of  the  latter 
body,  U.  Larin,  that  railroad  repair  can  be  facilitated 
if  parts  of  some  of  the  disabled  locomotives  would  be 
used  as  spare  parts  for  others  and  if  current  repairs 
would  be  speeded  up  at  the  expense  of  major  and 
minor  repairs.  These  measures  were  as  follows:  A 
registration  of  all  disabled  locomotives  was  ordered; 
current  repairs  were  to  be  increased  by  the  transfer 
of  men  from  district  shops  to  main  shops;  special 
premiiuns  in  food  were  established  for  men  working 
on  current  repairs;  parts  of  badly  disabled  locomotives 
were  ordered  to  be  used  for  the  repair  of  others. 

The  results  of  these  measures  by  the  middle  of 
March  showed  that  it  was  possible  to  keep  the  number 
of  locomotives  at  approximately  eighty-four  per  cent, 
of  the  minimum  requirements,  although  in  February, 
the  percentage  dropped  down  to  seventy-eight.  The 
percentage  of  disabled  locomotives  increased  to  60.3. 
At  the  same  time  the  average  number  of  locomotives 
passing  through  minor  repair  dropped  from  189  to 
130.* 

To  what  extent  these  measures  and  the  results 
achieved  through  their  application  constitute  an  actual 
improvement  is  rather  problematic.  All  through  the 
year  1919  there  was  a  tendency  for  the  increase  of 
the  number  of  locomotives  requiring  major  and  minor 
repairs.     Table  No.  8  indicates  this. 

Thus  with  the  tendency  for  the  increase  of  the  num- 
ber of  locomotives  requiring  more  or  less  serious  re- 

•  U.  Larin,  in  Moscow  Pravda,  March  21,  1920. 


Table  No. 

8 

Categories  of  Locomo 

tiv 

e  Repair  * 

Current 

Minor 

(in 

percentages) 

February  22, 

1919  ...49.5 

31 

March        " 

" 46 

33 

April           " 

" 44 

35.6 

May            " 

"  ....41 

38 

July 

"   ....43.3 

37 

October      " 

"  ....42 

37 

TRANSPORTATION  99 


Major 

19.5 
21 
24  + 
21 
19.7 
21 
January     "     1920 42.5  37.1  24  + 

pair  already  there,  the  taking  of  measures  to  facilitate 
this  tendency  seemed  rather  a  dangerous  experiment. 
Once  the  Soviet  Government  and  the  higher  eco- 
nomic institutions  realized  the  need  of  turning  special 
attention  to  the  work  of  railroad  repair,  however,  they 
went  about  the  matter  in  a  manner  so  characteristic  of 
them.  Everything  they  do  usually  has  a  background 
of  propaganda  and  of  more  or  less  fervent  agitation. 
So  in  this  case,  in  Petrograd,  for  example,  a  week 
was  set  aside  (January  8-14),  which  was  designated 
as  the  ''Week  of  Railroad  Repair."  Several  days 
before  the  ''Week  of  Repair"  began,  the  Petrograd 
Pravda,X  which  is  the  official  organ  of  the  Com- 
munist Party,  published  several  appeals,  of  which  the 
following  is  a  characteristic  example : 

The  disorganization  of  the  system  of  transportation  has 
now    reached   the    culminating    point    and,    unless    effective 

•  Ekonomicheskaya  Zhisn,  February   22,    1920. 

t  The   percentages    for   April    and   January    are   obviously    inaccurate; 
they  are  given,  however,  just  as  they  appear  in  the  original  table. 
t  January  G,   1920. 


100  ECONOMICS  OF  COMMUNISM 

measures  are  taken  to  stop  destruction  and  begin  construc- 
tion, we  may  say  with  assurance  that  this  will  have  an 
effect  upon  our  political  situation  as  well.  .  .  .  For  two 
years  we  have  been  rolling  down  the  hill,  making  all  efforts 
to  climb;  yet  we  cannot  climb  up-hill,  because  for  eveiy  step 
forward,  we  take  two  steps  backward. 

And  liere  is  another  one: 

The  Communist  railroad  employees  must  realize  once  for 
all  that  if  the  railroads  will  continue  to  decrease  their  ac- 
tivity, then  slow  but  sure  death  awaits  us.  And  this  death 
will  be  more  terrible  than  death  at  the  hands  of  the  Tsaristic 
hangmen,  because  it  will  show  our  ignorance,  our  inertness, 
and  our  inability  to  work. 

The  ''Week  of  Railroad  Repair,"  whicli  was  or- 
ganized also  in  other  parts  of  Soviet  Russia,  was,  of 
course,  merely  a  propaganda  method  of  stirring  up 
interest  in  the  transportation  situation.  Measures  of 
a  more  serious  character  were  indispensable.  And 
these  measures  were  concerned  particularly  with  the 
productivity  of  labor. 

Back  in  1919  all  the  railroads  of  Soviet  Russia  were 
ordered  under  military  control,  as  an  industiy  indis- 
pensable for  the  conduct  of  the  wars  which  were  then 
in  progress.  But  the  railroads  were  never  actually 
militarized.  The  railroad  workmen  remained  to  a 
large  extent  hostile  to  the  Soviet  regime.  Yet  in  1919 
no  measures  of  coercion  were  taken  to  overcome  this 
hostility  and  the  resulting  lack  of  productivity.  The 
only  thing  that  was  actually  done  along  these  lines  was 
a  registration  of  all  persons  formerly  employed  on  the 
railways  but  no  longer  working  there.  This  regis- 
tration was  ordered  by  the   decree  of  December   14, 


TEANSPOKTATION  101 

1919,  and  was  completed  in  most  places  by  Febru- 
ary, 1920,  The  results  of  tbis  registration  in  Mos- 
cow showed  that  there  were  five  hundred  former  rail- 
road employees  in  the  capital,  of  whom  115  were  doing 
indispensable  work  along  other  lines.  These  men 
were  left  where  they  were,  while  of  the  others,  several 
scores  of  engineers  and  technicians  and  about  two 
hundred  and  fifty  skilled  workmen  were  ordered  to 
railroad  work.* 

A  more  important  measure  in  this  connection  was 
taken  in  February,  1920,  when,  by  the  decree  of  Feb- 
ruary 7,  a  mobilization  was  ordered  of  all  persons 
employed  in  any  mechanical  capacity  on  the  Russian 
railroads  during  the  past  ten  years.  The  results  of 
this  mobilization,  however,  were  so  insignificant  (dur- 
ing the  first  two  weeks  only  forty-two  persons  were 
mobilized  in  Moscow),  that  it  was  decided  to  mobilize 
metal  workers  for  railroad  work.  Five  thousand  metal 
workers  in  Moscow  alone  constituted  the  first  contin- 
gent mobilized  for  work  on  transportation,  and,  as  the 
immediate  result  of  this  mobilization,  thirty-six  metal 
works  in  Moscow  were  shut  down  during  the  same 
month,  f 

The  total  shortage  of  transport  labor  for  1920  was 
estimated  at  93,000,  of  whom  37,500  were  skilled 
workmen  and  55,500  were  unskilled  laborers.  It  was 
hoped  that  the  skilled  workmen  would  be  recruited 
by  means  of  the  mobilization,  while  the  unskilled  la- 
borers it  was  proposed  to  recruit  either  from  the  Labor 
Armies  or  from  the  niral  population  within  a  distance 

*  Ekonomicheskaya   Zhisn,   February    22,    1920. 
^  Ibid. 


102  ECONOMICS  OF  COMMUNISM 

of  fifty  versts  from  the  railroad  lines.*  All  these 
mobilizations  were  carried  out  incompletely,  and  the 
productivity  of  this  mobilized  labor  when  it  added 
to  the  ranks  of  the  already  disaffected  railroad  em- 
ployees can  easily  be  judged  by  the  sternness  of  the 
more  recent  orders  concerning  punishments  to  be  meted 
out  to  negligent  railroad  workers. 

The  results  of  the  work  of  railroad  repair  after  the 
first  two  months  of  intensive  agitation  and  the  con- 
centration of  all  attention  on  the  problem  of  transpor- 
tation are  shown  in  Table  No.  9. 

Table  No.  9 
Disabled  Locomotives  in  January  and  Fehruary,  1920  t 

Per  cent,  of  disabled    Number  awaiting 

locomotives  repair 

January      15-22 58.3  1,018 

22-31 59.2  1,073 

February      1-8  60.5  1,100 

8-15 60.3  1,088 

"  15-22 60.8  1,135 

Thus  with  maximum  effort  put  into  the  repair  of  the 
rolling  stock,  not  even  the  newly  arriving  disabled  loco- 
motives could  be  repaired. 

Early  in  1920,  Trotsky  took  over  the  control  of  the 
Commissariat  of  Transportation,  which  until  then  had 
been  headed  by  Leonid  Krassin.  Trotsky's  work  at 
the  head  of  the  Commissariat  expressed  itself  par- 
ticularly in  the  working  out  of  a  plan  of  railroad  repair. 

•  Ekonomicheskaya  Zhisn,  February  22,   1920. 
t  Ibid.,    March    21,    1920. 


TEANSPOETATION  103 

extending  over  a  period  of  four  and  a  half  years.  This 
plan,  embodied  in  Order  No.  1042,  issued  May  22, 
went  into  effect  on  July  1  and  constitutes  the  landmark 
of  a  new  period  in  the  efforts  of  the  Soviet  authorities 
to  preserve  Russia's  railroad  apparatus  from  falling 
entirely  to  pieces. 

Jt.     The  First  Half  of  1920 

The  first  half  of  1920  constitutes  a  distinct  period 
in  the  railroad  situation  in  Soviet  Russia,  both  because 
especially  intensive  work  on  the  repair  of  the  rolling 
stock  began  during  the  first  month  of  this  period,  and 
because  the  period  is  followed  by  the  application  of  a 
new  plan  of  work.  It  is  important,  therefore,  to  ob- 
serve the  railroad  situation  during  this  period,  from 
the  point  of  view  of  general  conditions,  as  well  as  of 
some  of  the  principal  coefficiemts  of  work. 

The  first  characteristic  thing  about  the  period  is  the 
increase  in  the  total  amounts  of  the  rolling  stock,  shown 
below. 

Table  No.  10 

Increase  in  the  Rolling  Stock  * 

1916         1917         1918  1919         1920 

Locomotives    22,113       21,013       17,506         9,404       18,568 

Cars   516,755     574,486     308,855     245,441     434,336 

This  increase  in  the  amount  of  rolling  stock  under  the 
control  of  the  Moscow  Commissariat  of  Ways  of  Com- 
munication is  due,  of  course,  to  the/  fact  that  the  period 
under  discussion  was  the  time  when,  through  the  de- 

*  Ekonomicheskaya  Zhisn,  July   25,   1920. 


104  ECONOMICS  OF  COMMUNISM 

feat  of  Admiral  Kolchak  and  General  Denikin,  prac- 
tically the  whole  of  the  former  Russian  territory  came 
under  the  rule  of  the  Soviets.  As  we  saw  in  Table 
!N"o.  1,  because  of  the  Soviet  victories  in  the  civil  war, 
the  total  length  of  railroad  lines  under  the  control  of 
the  Soviet  Government  increased  from  23,000  in  Janu- 
ary, 1919,  to  48,000  in  January,  1920.  Later  in  the 
year,  still  more  mileage  was  added  to  the  system.  And 
Table  No.  10  shows  the  increase  of  the  rolling  stock 
due  to  the  same  cause. 

But  the  mere  increase  in  the  amounts  of  rolling  stock 
did  not  constitute  an  improvement  in  itself,  since  traf- 
fic facilities  are  determined  by  the  service  that  can  be 
rendered  for  each  unit  of  the  operating  lines.  Table 
No.  11  indicates  the  situation  with  this  regard. 

Part  A  of  Table  No.  11  shows  an  apparent  improve- 
ment: the  number  of  locomotives  in  running  order  for 
each  one  hundred  versts  of  operating  lines  increased 
from  eight  in  January  and  seven  in  February  to  11.2 
in  June.  At  the  same  timei,  the  number  of  cars  in- 
creased from  395  to  573.  But  part  B  of  the  same 
Table  shows  that  the  percentage  of  disabled  locomotives 
in  June  was  approximately  the  same  as  in  January 
(there  is  even  a  slight  increase  from  58.3  in  January 
to  59.0  in  June),  while  the  percentage  of  disabled  cars 
has  shown  a  marked  increase,  from  20  in  January  to 
22  in  June. 

No  wonder  that  I.  Mikhailov,  in  discussing  the  work 
of  the  Russian  railways  for  this  period,*  says : 

The  improvements  in  the  work  of  the  Russian  railways 
which  have  recently  become  noticeable  represent  merely  the 
•  Ekonomicheskaya  Zhisn,  July  25,  1920. 


TRANSPOETATION" 


105 


Table  No.  11* 

A.     Number  of  Locomotives  and  Cars  in  Running   Order 
per  100  Versts 

1920                1919  1916 
Locomo-          Locomo-          Locomo- 
tives    Cars  tives     Cars  tives     Cars 

January    8         395  19         804  27         809 

February    7         378  18         707  24         761 

March   8         435  15         634  27         845 

April    9.6      481  17         687  27         830 

May 11         548  16         600  27        819 

June   11.2      573  19        799  27        836 

B.     Percentage  of  Disabled  Locomotives  and  Cars 

1920  1919  1916 
Locomo-  Locomo-  Locomo- 
tives Cars  tives  Cars  tives     Cars 

January    58.3  20.9  47.7  16.6  18.8  3.7 

February    ..60.8  22.5  49.5  18.3  17.0  3.5 

March   6L1  22.3  52.4  18.8  17.3  3.4 

April  60.7  23.8  52.8  20.3  16.9  3.3 

May 59.9  22.9  52.5  21.7  17.0  4.0 

June    59.0  22.1  49.6  18.9  16.3  4.4 

stopping  of  further  disorganization  of  the  system  of  trans- 
portation, which,  even  at  that,  is  close  to  complete  paralysis. 
Therefore,  there  can  be  no  question  of  any  letting  down  in  the 
intensity  of  the  work  of  repair. 


This  general  improvement  in  the  railroad  service 
is  quite  apparent  from  the  following  coefficients  of 
railroad  traffic: 

*  Ekonomicheskaya  Zhisn,  June   14,   1920,   supplemented  with  figures 
from  Ibid.,  July  25,  1920. 


106  ECONOMICS  OF  COMMUNISM 

Table  No.  12* 

A.     Average  Daily  Run  of  Locomotives  and  Cars 
(in  versts) 
1920                       1919  1916 
Locomo-               Locomo-  Locomo- 
tives      Cars       tives  Cars       tives     Cars 

January    69.5        31.4        70.0  28         112.4    41.5 

April  71.7        37.9         71.0  33         112.4    41.5 

June    74.7       41.4        73.0        38         

B.     Movement  of  a  Working   Car  {in  days) 

1920  1919  1916 

January 12.7  11.7  6.0 

April    10.3  9.2  5.4 

June 8.5  8.5  4.6 

C.     Daily  Loading  per  Hundred  Versts  (in  number  of  cars) 
1920  1919  1916 

January 14  28  48 

April 15  27  51 

June 18  31  59 

D.     Commercial  Speed 

Mareli    10.2  versts  per  hour 

May   11.8      "        "      " 

June    12.5       "         ''       " 

E.     Average  Size  of  Trains 

February    65.6  axles 

May     75.5      " 

June   75.8      " 

F.     Average  Cargo 

Per  car  Per  train 

February    330  pouds  11,097  pouds 

May    349      "  12,760      " 

June 13,190      " 

*  Ekonomicheskaya  Zhisn,  June  14  and  July  25,  1920. 


TEANSPORTATION  107 

Another  improvement  brought  about  during  this  pe- 
riod was  in  the  passenger  service.  This  branch  of  the 
railroad  traffic  was  very  badly  disorganized  by  the  war, 
and  particularly  by  the  disorderly  and  undirected  de- 
mobilization which  followed  the  first  period  of  the 
Eevolution.  Passenger  cars  were  destroyed  or  dam- 
aged, and  schedules  were  entirely  broken  up.  The  first 
result  of  this  disorganization  was  the  giving  up  of  the 
system  of  through  trains.  Then,  wheal  the  whole  rail- 
road service  began  to  break  down,  the  passenger  traffic 
was  gradually  reduced,  until  only  one  or  two  pairs  of 
trains  would  be  run  on  a  road  during  the  week,  and 
these  trains  would  never  leave  on  time.  During  the 
first  six  months  of  1920,  the  number  of  passenger  trains 
was  increased  very  considerably,  and  schedules  again 
were  introduced  and  began  to  be  observed.  More- 
over, the  system  of  through  trains  became  reestablished, 
and  eighteen  direct  routes  organized,  the  important 
ones  among  them  being  the  following:  Moscow-Omsk 
(2,787  versts)  ;  Moscow-Caucasus  (1,735  versts)  ; 
Moscow- Archangel  (1,065  versts).* 

The  three  fundamental  difficulties  with  which  the 
railroads  have  to  deal  were  as  pressing  as  ever  during 
this  period.  The  lack  of  spare  parts  and  of  metals 
continued  acute.  The  shortage  of  skilled  labor  was  es- 
timated at  forty  thousand,  mostly  metal  workers; 
while  the  total  labor  shortage  was  over  150,000.  Lack 
of  labor  discipline  still  continued  to  be  a  circumstance 
rendering  labor  shortage  still  worse.  For  example,  at 
the  Viskunsk  foundry,  which  in  May  was  supplied 
with  only  46.7  per  cent,  of  the  number  of  workmen 

*  Ekonomicheskaya  Zhisn,  July  25,   1920. 


108  ECONOMICS  OF  COMMUNISM 

it  needed  (the  number  on  May  21  being  only  36  per 
cent.),  there  was,  in  addition,  an  absence  average  of  48 
per  cent.  The  "Novaya  Etna,"  a  nail  and  bolt  factory, 
was  supplied  with  only  18  per  cent,  of  its  labor  re- 
quirement. Finally,  the  question  of  fuel  still  continued 
to  be  critical.  In  1919,  all  the  roads  used  wood  for 
their  engines.  The  trouble  with  wood  lay,  first  of  all, 
in  the  fact  that  it  had  to  be  hauled  over  larger  distances 
than  coal  or  oil:  the  average  distance  of  haulage  for 
oil  and  coal  is  350  versts,  for  wood,  775  versts.  Be- 
sides, the  cargo  space  occupied  by  wood  is  very  much 
greater  than  with  coal  and  oil:  one  tank  car  of  oil  is 
equivalent  to  seven  carloads  of  wood,  while  one  carload 
of  coal  is  equivalent  to  four  carloads  of  wood.  At  the 
beginning  of  1920,  the  amounts  of  coal  and  oil  which 
were  available  were  still  very  small,  while  there  were 
scarcely  any  supplies  of  wood.  The  Nikolayev  Rail- 
road, for  example,  connecting  Moscow  and  Petrograd, 
had  scarcely  any  supplies  of  wood  as  late  as  July.* 
There  was  another  question  which  acquired  special 
importance  during  the  first  six  months  of  1920.  For 
the  first  time  in  years  the  railroad  system  began  to 
show  signs  of  improvement,  and  the  matter  of  utilizing 
the  railroad  facilities  to  the  fullest  extent  became  one 
of  great  importance.  But  the  experience  in  this  re- 
spect during  the  first  six  months  of  1920  was  most  un- 
satisfactory. In  June,  for  example,  the  Department  of 
Supplies,  which  is  charged  particularly  with  the  duty 
of  moving  grain  freight,  loaded  only  58  per  cent,  of 
the  number  of  cars  which  were  placed  at  its  disposal 
in  accordance  with  its  plan  of  work.     During  the  same 

*  Ekonomicheskaya  Zhisn,  July  25,   1920. 


TEANSPORTATION  109 

month,  the  Supreme  Council  of  National  Economy  used 
less  than  50  per  cent,  of  the  cars  placed  at  its  disposal. 
Because  the  various  departments  did  not  use  their 
quotas  of  railroad  cars,  during  the  month  of  June  there 
were  35,000  idle  cars  and  329  idle  locomotives  on  the 
various  lines.*  The  following  table  shows  the  extent 
of  this  underloading  by  the  various  governmental  de- 
partments during  the  whole  period: 

Table  No.  13 
Underloading  hy  Governmental  Departments  \ 

Fuel  Supreme  Council            Supplies 

in  thousands  of  pouds 

January     42,038  3,038                  no  inform. 

February   30,051  9,183 

March    21,859  11,748 

April    24,833  17,760                        4,590 

May    26,451  9,235                      11,842 

June 20,840  21,540                      20,250 

Considering  the  most  critical  situation  in  which 
Soviet  Russia  finds  herself,  particularly  with  regard  to 
fuel  and  food  supplies,  this  failure  of  the  governmental 
departments  to  make  use  of  the  available  railroad  facili- 
ties for  the  transportation  of  their  cargoes  is  really 
amazing.  In  this  respect  there  are  indications  of  but 
slight  improvement  after  July  1,  as  is  shown  below. 

There  is  no  doubt  that  in  some  degree  this  situation 
is  caused  by  lack  of  efficient  management  on  the  roads 
themselves.     The  actual  running  of  the  different  roads 

•  Ekonomicheskaya  Zhisn,  July  25,  1920. 
t  Ibid. 


110  ECONOMICS  OF  COMMUNISM 

Table  No.  14 

Loading   on  All   the  Railroads  for  July  1-10* 

Expected      Loaded  Per 

in  carloads  cent. 

Food  Supplies   1,537  1,055  68.6 

Fuel   4,157  3,418  82.2 

Cargoes  of  the  Supreme  Council 

of  National  Economy   1,400  861  61.5 

is  in  the  hands  of  committees  of  railroad  employees  and 
of  special  agents,  the  latter  being  appointed  by  the 
Commissary  of  Ways  of  Communication  and  responsi- 
ble to  him.  There  is  necessarily  always  a  clash  be- 
tween these  two  organs  of  management,  whose  func- 
tions do  not  seem  to  be  clearly  defined  in  either  case. 
The  kind  of  incidents  that  may  take  place  on  the  rail- 
roads in  Soviet  Russia  under  their  present  system  of 
management  may  be  seen  from  the  following  story. 

On  March  9,  1920,  a  complaint  was  lodged  with  the 
Presidium  of  the  Supreme  Council  of  National  Econ- 
omy, in  which  it  was  stated  that  on  January  26,  a 
train  left  Tashkent,  the  capital  of  Turkestan,  carrying 
twelve  tank  cars  of  cotton  seed  oil,  loaded  there  in  re- 
sponse to  an  urgent  request  from  Kazan.  To  this  train 
was  also  attached  a  special  car,  in  which  the  President 
of  the  Turkestan  Central  Executive  Conmiittee,  Com- 
rade Anin,  was  traveling  to  Moscow.  On  January  28, 
Anin  ordered  the  tank  cars  taken  off  the  train,  because 
they  were  too  heavy  and  retarded  his  progress,  making 
him  apprehensive  lest  he  should  not  arrive  in  Moscow  in 
time  to  attend  a  certain  conference.  Instead  of  the  tank 
cars,  Anin  ordered  twelve  carloads  of  wood  attached 

•  Ekonomicheskaya  Zhisn,  July   27,   1920. 


TRANSPOETATION  111 

to  his  train  to  be  used  as  fuel  for  his  engine.  The 
oil  was  left  at  the  small  station  of  "Chili,"  while  the 
train  proceeded  to  Moscow  in  its  new  formation.*  This 
is  merely  an  illustration  of  the  lack  of  effective  man- 
agement in  so  important  a  matter  as  the  transportation 
of  vital  necessities. 

5.     The  Rehabilitation  Plan 

The  plan  for  the  rehabilitation  of  the  rolling  stock 
on  the  Russian  railroad  system  is  embodied  in  Order 
No.  1042,  issued  on  May  22,  1920,  by  the  Commis- 
sariat of  Ways  of  Communication  and  over  Trotsky's 
signature  as  the  acting  head  of  the  Commissariat. 
This  plan  is  based  on  several  considerations  of  past  ex- 
perience, and  is  expected  to  return  the  Russian  railroad 
system  to  what  is  considered  nonnal  condition  within 
fifty-four  months,  f 

The  actual  carrying  out  of  the  plan  began  on  July 
1,  1920.  It  was  estimated  in  Order  No.  1042  that  on 
that  date  there  were  on  all  the  railroad  lines  in  Soviet 
Russia,  sixteen  thousand  locomotives,  of  which  9,600 
were  disabled  and  6,400  were  in  running  order.  It 
is  intended  to  keep  the  whole  number  of  locomotives 
constant  through  the  period  covered  by  the  plan,  and 
to  change  the  ratio  between  the  disabled  and  the  run- 
ning locomotives  to  what  it  was  before  the  Revolution, 
viz.,  one  to  four.  In  other  words,  by  January  1,  1925, 
there  should  be  12,800  locomotives  in  working  order 
and  3,200  disabled  locomotives. 

*  Ekonomicheskaya    Zhisn,    March    23,    1920. 

t  The  text  of  the  Order  is  found  iu  EkonomicJieskaya  Zhisn,  May 
29,   1920  ;    the   explanation,    in   Ibid.,  May   30. 


113 


ECONOMICS  OF  COMMUNISM 


In  the  Order  itself,  the  following  fundamental  fea- 
tures of  this  plan  are  pointed  out:  First,  the  number 
of  locomotives  on  the  railroad  lines  of  Soviet  Russia 
shall  remain  constant  during  the  whole  four  and  a 
half  year  period,  the  figure  being  as  on  July  1,  1920, 
or  16,000;  second,  the  plan  entirely  disregards  the  pos- 
sibility of  importing  new  locomotives  from  abroad: 
third,  it  is  expected  that  the  work  called  for  by  the 
plan  would  be  carried  out  by  means  of  the  equipment 
and  the  facilities  found  in  Russia  at  the  present  time, 
and  the  possibility  of  importing  spare  parts  and  ma- 
chinery from  abroad  has  been  deliberately  left  out  of 
the  plan.  The  following  Table  shows  the  whole  plan 
in  greater  detail: 

Table  No.  15 

A.  Number   of  Locomotives   Expected   to    Undergo    Major 

Repairs 

R.R.  shops       Foundries  Total 

1920  (2nd  half)   300  300 

1921 400  1,400  1,800 

1922 800  1,400  2,200 

1923 1,200  800  2,000 

1924    1,600  550  2,150 

Total    .4,000  4,450  8,450 

B.  Number   of   Locomotives   Expected   to    Undergo   Minor 

Repairs 

R.R.    shops         Foundries  Total 

1920  (2nd  half)    4,000  300  4,300 

1921    9,000  1,500  10,500 

1922    10,700  600  11,300 

1923    12,500  12,500 

1924    14,300  14.300 

Total .50,500  2,400  52,900 


TRANSPORTATION  113 

If  this  plan  is  carried  out,  then  in  1925,  twenty-one 
hundred  locomotives  would  pass  through  major  repair 
and  sixteen  thousand  would  undergo  minor  repair.  It 
is  expected  that  by  1925  the  time  for  major  repair 
would  be  reduced  to  two  months  and  for  minor  repair 
to  three  weeks.  This  would  mean  that  the  average 
of  locomotives  not  in  operation  during  the  year  because 
of  repair  would  be  about  20  per  cent. 

The  experience  of  locomotive  repair  in  the  past 
months  is  taken  by  the  Commissariat  as  part  of  the 
basis  for  its  calculation  for  the  first  six  months  of  the 
plan.  During  June,  for  example,  666  units  of  minor 
repair  were  turned  out;  the  plan  allotment  for  July 
is  683  units.  The  quotas  of  the  succeeding  years  in- 
crease in  increments  of  from  ten  to  fifteen  per  cent,  on 
the  basis  of  the  work  of  the  current  year. 

There  is  one  feature  in  the  plan,  however,  that  does 
not  seem  plausible  even  on  the  face  of  it :  the  constancy 
of  the  number  of  locomotives.  The  question  of  wear 
and  replacement  is  obviously  entirely  ignored,  except 
from  the  point  of  view  of  the  importation  of  rolling 
stock.  And  Order  No.  1042  gives  warning  that  no 
importation  should  be  expected  during  the  period  cov- 
ered by  the  plan.  At  the  same  time  nothing  is  said 
about  replacement  through  home  production,  and  not  a 
word  about  wear. 

Turning  again  to  I.  Mikhailov,  as  the  Soviet  au- 
thority on  railways,  we  find  the  following  discussion  of 
the  needs  of  rolling  stock  on  the  Russian  railways  and 
the  facilities  for  replacement.* 

The  number  of  locomotives  needed  for  each  hundred 

•  Ekonomicheskaya  Zhisn,  March   7,   1920. 


114  ECOKOMICS  OF  COMMUNISM 

versts  of  the  line  is  thirty.  Taking  the  total  length  of 
the  lines  as  60,000  versts,  the  total  need  of  locomotives 
is  about  18,000.  The  number  of  freight  cars  is  esti- 
mated at  thirty  to  each  locomotive,  or  540,000  for  the 
whole  system. 

The  average  life  of  a  locomotive  under  the  best  con- 
ditions is  twenty-five  years.  Under  fairly  normal  con- 
ditions, it  is  about  half  that  period.  On  the  basis  of 
the  age  of  the  locomotives  on  the  Kussian  railroad  sys- 
tem, it  is  estimated  that  normally  thirteen  himdred 
locomotives  and  thirty  thousand  cars  are  annually  lost 
by  the  service  through  wear.  Considering  the  present 
situation  on  the  Russian  railways,  the  wear  must  be 
greater  than  normally,  the  average  life  of  a  locomotive, 
consequently,  shorter,  and  the  loss  through  wear  at  least 
as  high  as  the  figure  for  normal  time.  Since  this  is 
so,  then  it  seems  inconceivable  how  the  number  of  loco- 
motives can  possibly  be  kept  at  a  constant  fig-ure,  with- 
out continuous  and  effective  replacement. 

Now,  what  are  the  facilities  in  Russia  for  building 
rolling  stock.  Again,  on  the  basis  of  I.  Mikhailov's 
discussion  of  the  question,  we  get  the  following  figures : 

In  1912-13  an  investigation  was  made  of  the  Russian 
foundries  and  shops  with  a  view  of  ascertaining  their  ca- 
pacity for  building  locomotives  and  cars.  It  was  found 
that,  when  working  at  a  maximum  speed,  all  the  Rus- 
sian car  and  locomotive  works  can  produce  from  sev- 
enteen to  eighteen  hundred  locomotives  and  from  forty 
to  forty-five  thousand  cars  a  year.  The  actual  produc- 
tion, however,  has  never  even  approached  these  figures, 
as  may  be  seen  from  the  following  table: 


TEANSPORTATION  115 

Table  No.  16 
The  Output  of  the  Russian  Car  and  Locomotive  WorTcs 

Locomotives     Cars  of  all  description 
1906 1,281 


1907. 
1908. 
1909. 
1910. 
1911. 
1912. 
1913. 
1014. 
1915. 


,2JOL 

756 

641 

514 

495 

8,103 

416 

7,283 

363 

10,130 

535 

19,042 

816 

31,855 

903 

33,124 

In  1916  the  output  of  these  works  dropped  down 
again  to  a  very  low  ligure.  The  two  years  following, 
1917  and  1918,  gave  still  poorer  results,  and  1919  gave 
but  49  new  locomotives. 

In  view  of  the  fact  that  Eussia  has  lost  some  of  her 
car  and  locomotive  works  (in  the  Baltic  Provinces,  for 
example),  the  total  output  cannot  now  be  as  great  as 
it  was  before  the  Eevolution.  Theoretically,  the  Rus- 
sian works  may  be  able  to  produce  about  five  hundred 
locomotives  and  fifteen  thousand  cars  a  year.  But  in 
reality,  of  course,  such  figures  seem  entirely  Utopian; 
while  in  view  of  the  vast  work  of  rehabilitation  and  re- 
pair of  the  already  existing  rolling  stock,  production 
of  new  rolling  stock  on  anything  like  this  scale  seems 
humanly  impossible.'^ 

*  In  1918,  during  his  stay  in  the  United  States  as  the  head  of  the 
Russian  Railways  Mission,  Professor  Lomonossov,  now  a  prominent 
member  of  the  Commissariat  of  Ways  of  Communication,  estimated 
Russia's  need  in  locomotives  for  purposes  of  replacement  and  extension 
as   no   less   than    two   thousand   a   year.      His   estimate   of   the   possible 


116  ECONOMICS  OF  COMMUNISM 

In  view  of  this  situation,  it  seems  incomprehensible 
how  it  would  be  possible  to  keep  the  number  of  locomo- 
tives constant  during  a  period  of  four  and  a  half  years 
without  importation  and,  apparently,  without  appre- 
ciable replacement  at  home.  Unfortunately,  neither 
Order  No.  1042  nor  the  explanations  of  the  plan  of  re- 
habilitation embodied  in  it  which  accompany  the  Order, 
offer  any  light  on  this  subject. 

Nor  are  the  reports  concerning  the  actual  work  of 
railroad  repair  in  accordance  with  Order  No.  1042 
indicative  of  success.  It  is  true  that  the  percentage 
of  disabled  locomotives  in  September,  1920,  was  57.1, 
while  in  January,  1920,  it  was  58.1;  but  that  is 
merely  the  normal  improvement  in  the  railroad  sit- 
uation that  comes  during  the  sununer  months  as  com- 
pared with  the  winter  months.  Moreover,  the  slight 
improvement  in  the  condition  of  the  locomotives  was 
achieved  at  the  expense  of  car  repair ;  the  percentage  of 
disabled  cars  in  September,  1920,  was  24.8,  as  against 
19  in  January  of  the  same  year.* 

The  statistical  data  concerning  the  work  of  repair 
on  the  railroad  rolling  stock  during  the  second  half 
of  1920  shows  good  results  for  the  efforts  of  the  railroad 
repair  shops,  and  very  poor  results  for  those  of  the 
metallurgical  foundries.  The  railroad  shops  have  pro- 
duced nearly  all  that  was  expected  of  them  and  in  some 

output  of  the  Russian  works  was  six  hundred  and  fifty  locomotives  a 
year,  provided  radical  changes  were  introduced  in  the  methods  of 
production.  The  falling  off  in  the  output  of  the  Russian  works  he  ex- 
plained as  the  result  of  the  policy  of  the  State  Railways  Administra- 
tion, which  in  1910  ordered  only  195  locomotives,  instead  of  over  a 
thousand  as  in  190G,  thus  forcing  most  of  the  works  to  turn  to  other 
fields. 

*  Ekonomicheskaya  Zhisn,  November   7,    1920. 


TEANSPORTATION  117 

instances  more.  But,  as  may  be  seen  from  Table  No. 
15,  tliey  were  asked  to  do  only  minor  or  current  repairs. 
Major  repairs  were  to  be  done  by  tlie  foundries,  con- 
trolled not  by  the  Commissariat  of  Ways  of  Communi- 
cation, but  by  the  Supreme  Council  of  ISFational  Econ- 
omy. These  foundries  turned  out,  from  July  1,  1920, 
to  January  1,  1921,  only  233  repair  units,  out  of  the 
600  allotted  to  them  by  Order  No.  1042,  or  only  38.8 
per  cent,  of  the  amount  expected,* 

The  question  of  locomotives  is  the  most  acute  and  the 
most  pressing  of  the  railroad  problems  in  Soviet  Russia, 
and  it  receives  special  attention.  But  it  is  not,  of 
course,  the  only  problem.  The  question  of  the  rehabili- 
tation of  the  cars  is  also  a  pressing  one,  though  not  in 
the  same  degree  as  that  of  locomotives.  However,  very 
intensive  work  must  be  done  on  the  cars,  as  well  as 
the  locomotives.  And,  naturally,  difficulties  of  a  simi- 
lar nature  are  encountered  here. 

The  question  of  road  maintenance  and  possible  exten- 

*  Moscow  Izvestiya,  February  11,  1921.  In  commenting  on  the 
situation  created  by  this  failure  on  the  part  of  the  foundries  to  per- 
form the  task  assigned  to  them  under  Order  No.  1042,  the  report 
from  which  these  figures  are  taken,  says: 

"The  outlook  for  1921  is  still  worse.  The  expected  number  of  repair 
units  is  2,200.  Yet  the  Metal  Division  has  asked  the  shops  for  only 
733  units,  or  33  per  cent.  ;  the  smoke  stack  allotment  is  one-half  of 
the  expected  number,  while  that  of  metal  parts  is  40  per  cent.  In 
view  of  the  hopelessness  of  the  smoke-stack  situation,  an  order  has 
been  given  to  remove  stacks  from  disabled  locomotives. 

"Thus  it  appears  clear  that  no  matter  how  energetically  proceeds 
the  work  of  the  Commissariat  of  Ways  of  Communication,  the  lack  of 
activity  on  the  part  of  the  Supreme  Council  may  reduce  to  naught  all 
that  work  and  upset  the  whole  "shock"  program  of  order  No.  1042, 
with  the  result  that  the  work  of  railroad  repair  will  again  come  to 
a  stop. 

"It  is  clear  that  the  Supreme  Council  of  National  Economy  must 
take  all  possible  measures  to  deliver  100  per  cent  of  the  order  for 
repair  placed  with  it,  instead  of  one-third,  especially  since  we  have 
nothing  else  to  rely  on  in  the  work  of  rehabilitating  our  system  of 
transportation." 


118  ECONOMICS  OF  COMMUNISM 

sion  is  also  one  that  cannot  be  neglected.  The  Commis- 
sariat of  Ways  of  Communication  has  a  plan  of  road 
construction  and  maintenance  for  the  years  1920-21, 
which  calls  for  the  following  work:  Construction  of 
3,644  versts  of  new  rail  lines,  300  versts  of  branch 
lines,  and  1,500  versts  of  special  branch  lines  for  the 
transportation  of  fuel ;  laying  of  1,480  versts  of  beds ; 
repair  of  over  five  thousand  versts  of  lines  damaged 
by  the  war  on  various  fronts ;  and  other  work  of  local 
construction  and  repair.  Moreover,  it  is  proposed 
to  make  a  preliminary  survey  for  10,790  versts  of  new 
lines,  and  final  survey  for  14,122  versts.*  To  what 
extent  this  program,  which  is  very  modest  when  com- 
pared with  the  amount  of  similar  work  done  in  normal 
times,  but  very  extensive  considering  the  present  situa- 
tion, will  be  carried  out,  there  is  no  telling.  Reports 
published  so  far  have  been  very  vag-uC',  and,  in  most 
cases,  scarcely  encouraging. 

6.     The  Waterways 

Russia  is  very  favorably  situated  as  far  as  her  water- 
ways are  concerned,  both  from  the  point  of  view  of 
the  length  and  the  direction  of  her  navigable  rivers. 
A  country  of  tremendous  distances,  Russia  is  very  for- 
tunate in  having  several  long  rivers,  most  of  them  hav- 
ing their  sources  in  or  near  the  central  part  of  the 
country,  and  with  their  basins  close  to  each  other 
through  their  numerous  tributaries.  Moreover,  most 
of  these  rivers  are  navigable,  or  can  be  rendered  so 
without  much   difficulty.     In  European   Russia  alone 

*  Ekonomicheskaya   Zhisn,   July    27,    1920. 


TRANSPORTATION  119 

there  are  232,000  versts  of  waterways  (rivers  and  lakes) 
fit  for  navigation,  of  which,  however,  only  42,000  versts 
are  actually  navigable  at  the  present  time.  The  im- 
portance of  these  waterways  as  means  of  transporta- 
tion may  be  seen  from  the  fact  that  during  1907-11 
the  traffic  on  the  waterways  was  equal  to  fully  50  per 
cent,  of  the  total  railroad  traffic  of  the  country.^' 

There  are  numerous  canals  in  the  various  parts  of  the     ^  <':> 
country,  particularly  in  the  central  and  northwestern    :,'''', 
parts.     But  most  of  these  canals  are  old  and  need  at- 
tention, while  at  the  same  time  there  are  various  new    '^^^" 
projects  of  canal  construction  that  press  for  action. 

Under  the  Soviet  regime,  the  work  on  the  construction 
and  the  maintenance  of  waterways  was,  at  first,  placed 
in  the  hands  of  the  Committee  on  Public  Works,  which 
is  a  department  of  the  Supreme  Council  of  National 
Economy.  Kecently,  however,  the  administration  of 
the  waterways  was  taken  out  of  the  hands  of  this  Com- 
mittee and  v/as  given  over  to  the  Commissariat  of  Ways 
of  Communication,  which  already  had  charge  of  the 
railways. 

There  are  several  important  problems  in  waterways 
construction  and  repair.  In  the  north,  work  must  be 
done  on  the  system  of  canals  in  the  vicinity  of  Petro- 
grad,  and  also  on  a  veiy  extensive  system  in  the  re- 
gion of  the  White  Sea.  In  this  latter  region  there 
is  already  in  existence  a  system  of  canals,  connecting 
various  lakes  and  rivers,  but  this  system  is  both  inade- 
quate and  does  not  provide  access  to  the  White  Sea. 

*  The  general  considerations  concerning  the  Russian  system  of  water- 
ways are  based  mainly  on  the  information  contained  in  the  Soviet 
Yearbook  for  1919,  loo.  cit. 


120  ECONOMICS  OF  COMMUNISM 

Witli  the  completion  of  the  new  system,  having  ader 
quate  outlets  to  the  White  Sea,  the  vast  natural  wealth 
of  the  Noi-th  will  become  available.  There  are  nearly- 
one  hundred  and  fifty  million  acres  of  timberland  in 
the  Governments  of  Archangel,  Vologda  and  Olonetz; 
platinum,  gold,  copper,  iron,  salt  and  sulphur  in  the 
Pechora  district;  petroleum  in  the  Ukhtinsk  Basin  of 
the  same  district ;  platinum  and  gold  in  North  Urals. 
All  this  wealth  is  inaccessible  at  present  because  of  lack 
of  communication. 

In  the  central  part  of  Russia  work  must  be  done  on 
the  Moskvoretzk  system,  and  considerable  dredging  on 
the  Volga. 

In  the  south,  two  very  important  projects  are  pressing 
for  action.  The  first  is  the  construction  of  canals 
around  the  Dniepr  Kapids,  which  would  make  that 
long  and  important  river,  traversing  the  great  gTain  belt 
of  Ukraina  and  New  Russia,  navigable  almost  its  whole 
length,  from  Western  Russia  to  the  Black  Sea.  The 
second  is  the  construction  of  a  canal  connecting  the 
Volga  and  the  Don  Rivers,  thus  joining  the  Black  and 
the  Caspian  Seas.  Such  a  canal  would  make  it  possible 
to  supply  the  Ural  metallurgical  field  with  the  Donetz 
coal,  which  is  particularly  important  in  view  of  the 
exhaustion  of  the  iron  ore  region  at  Krivoy  Rog,  near 
the  Donetz  coal  basin.  Until  now  the  great  difiiculty 
of  the  Ural  district,  which  is  very  rich  in  iron  ore, 
has  been  the  lack  of  coal,  the  carting  of  which  by  rail 
from  the  Donetz  basin  located  near  the  Black  Sea  has 
never  seemed  quite  possible.  Another  advantage  of  this 
canal  would  be  the  possibility  of  shipping  grain  by 


TRANSPORTATION  121 

water  to  Central  Russia  and  of  carrying  petroleum 
to  the  provinces  in  the  south  and  the  southwest.  Still 
another  advantage  would  lie  in  the  possibilities  which 
would  thus  be  opened  for  the  development  of  the  Trans- 
Caspian  Territory.  There  is  also  a  plan  of  connecting 
by  a  canal  the  Kama  river  (a  tributary  of  the  Volga) 
with  the  river  Ob  in  Siberia.  These  two  canals,  the 
Volga-Don  and  the  Kama-Ob,  would  provide  water  con- 
nection between  the  Black  Sea  and  most  of  Western 
Siberia,  opening  up  enormous  possibilities  of  economic 
development  for  a  huge  territory.* 

The  Soviet  specialists  realize  tlie  importance  of  all 
this  work,  but,  as  with  all  other  w^ork  of  similar  nature, 
very  little  is  being  done,  although  very  large  sums  of 
money  are  appropriated  and  spent.  In  the  second  half 
of  1918,  for  example,  157,000,000  roubles  were  appro- 
priated and  spent  for  construction  work  on  the  water- 
ways, with  scarcely  anything  to  show  for  the  expendi- 
ture of  this  large  sum  of  money. 

In  the  meantime,  however,  water  transportation  con- 
tinues to  play  an  important  part  in  the  whole  system 
of  transportation,  particularly  in  view  of  the  break- 
down of  the  railroad  system.  However,  the  situation 
as  far  as  the  river  fleet  is  concerned  is  scarcely  better, 
from  the  point  of  view  of  equipment  and  operation, 
than  the  railroad  situation. 

♦  The  importance  of  a  canal  connecting  the  Volga  and  the  Don  basins 
has  been  realized  for  a  number  of  centuries.  As  far  back  as  the  XVIth 
century,  the  Turkish  Sultan  Suliman  began  the  construction  of  a 
canal,  connecting  the  tributaries  of  these  two  rivers.  But  the  work 
was  abandoned  for  lack  of  engineers.  Peter  the  Great  took  up  this 
work  later,  but  also  did  not  finish  it.  It  was  only  at  the  end  of  the 
past  century  that  serious  attention  began  again  to  be  paid  to  the 
matter. 


123  ECONOMICS  OF  COMMUNISM 

At  the  Third  AU-Russian  Congress  of  Water  Trans- 
port Workers,  held  in  Moscow  in  March,  1920,  a  re- 
port was  made  on  the  general  condition  of  the  water- 
ways.* The  most  important  feature  of  the  situation 
was  the  loss  of  river  craft,  particularly  of  power  boats, 
due  mostly  to  the  exigencies  of  the  civil  war.  The  num- 
ber of  power  boats  on  the  Volga  system,  for  example, 
was  estimated  as  forty  per  cent,  less  than  before  the 
Revolution;  on  the  Mariinsk  system,  the  loss  of  power 
craft  is  thirty-nine  per  cent. ;  on  the  Northern  system, 
nearly  fifty  per  cent.  Most  of  the  boats  that  remain  are 
old,  since  few  have  been  built  in  recent  years.  The  con- 
sti-uction  program,  both  as  far  as  the  system  of  water- 
ways and  the  river  fleet  are  concerned,  prescribed  for 
the  year  1920,  could  scarcely  be  carried  out  to  the 
extent  of  fifty  per  cent. 

Lack  of  fuel  was  the  chief  handicap.  During  1919, 
two  million  pouds  of  liquid  fuel  were  furnished  to  the 
system,  while  during  1920,  scarcely  100,000  ponds 
were  expected.  The  number  of  boats  ready  for  naviga- 
tion at  the  time  of  the  report  was  134  passenger- 
freight  boats,  450  tugs  and  850  barges.  No  new  boats 
were  being  built,  although  orders  for  them  were  ready  to 
be  placed.  But  these  orders  could  not  be  filled,  again 
for  lack  of  fuel ;  wood  alone  was  available,  but  even  it 
is  not  found  everywhere  along  the  water  routes.  More- 
over, there  was  a  shortage  of  both  materials  and 
labor. 

The  total  number  of  river  craft  on  the  whole  system 

*  Ekonomicheskaya  Zhian,  March  21,  1920. 


TRANSPORTATION  123 

of  waterways  in  kSoviet  Russia  was  estimated  as  follows 
at  the  beginning  of  1920  : 

Table  No.  17 

Total  Number  of  River   Craft  * 

Tonnage 

Powej"  boats        Barges  (in  pouds) 

1.  Volga  system    958                4,844  362,091,407 

2.  Mariinsk   system    940                 5,617  121,106,999 

3.  Northern  system   227                   403  19,173,007 

4.  Dniepr  system 178                   208  3,824,200 


Total     2,303  11,072  506,195,613 

While  the  total  number  of  river  craft  is  thus  thirteen 
and  a  half  thousand,  most  of  these  boats  and  barges  re- 
quire repair.  The  repair  facilities  are  as  follows:  On 
the  Volga  system  there  are  113  repair  shops,  employing 
14,950  workmen;  on  the  Mariinsk  system  there  are  33 
shops  with  2,140  workmen;  on  the  Northern  system 
there  are  four  shops  with  about  300  workmeu ;  on 
the  Dniepr  system,  five  shops  with  about  a  thousand 
workmen;  on  the  Northwestern  system,  three  shops, 
with  150  men.  In  this  list  are  included  all  of  the  re- 
pair shops,  even  the  smallest  ones.  All  of  these  repair 
shops  are  old  and  poorly  equipped.  Not  one  of  them, 
for  example,  is  fitted  with  machinery  for  steel  casting; 
all  work  requiring  this  process  must  be  ordered  from 
shops  of  other  departments.  Besides  the  repair  shops, 
there  are  also  twenty-seven  docks  (including  those  in 
the  Astrakhan  and  Azov-Black  Sea  regions).  Only 
one  of  these  docks  is  iron;  the  rest  are  wooden  and  in 

•  Ekonomicheskaya  Zhisn,  February  19,   1920. 


124  ECONOMICS  OF  COMMUNISM 

very  poor  condition.  Those  that  are  still  working  are 
used  most  of  the  time  for  repairing  craft  belonging 
to  the  Commissariat  of  Marine.* 

The  first  period  of  navigation  on  the  waterways  of 
Soviet  Russia  for  the  year  1920  ended  on  June  1.  The 
following  table  shows  the  results  of  this  period  from 
the  point  of  view  of  the  tonnage  transported,  a  com- 
parison being  made  with  the  corresponding  period  in 
1919: 

Table  No.  18 

Shippings  on  the   Waterivays  up  to  June  1,  1920  \ 

(in  thousands  of  pouds) 

1920  1919 

Grains 3,535  1,200 

Salt  681  2,500 

Wood  and  timber 5,372  5,900 

Others  (incl.  petroleum) 1,588  6,400 

Total 11,176  16,000 

Thus,  the  total  tonnage  shipped  in  1920  was  less  than 
that  shipped  in  1919  by  nearly  forty-five  per  cent.:|; 

*  Ekonomicheskaya  Zhisn,  February  19,   1920. 

t  Ibid.,  June   13,   1920. 

t  The  table  given  here  was  used  by  I.  Mikhailov  in  an  article  on  the 
results  of  the  spring  navigation,  published  in  the  Ekonomicheskaya 
Zhisn  of  June  13,  1920.  These  figures  and  the  resulting  conclusion 
concerning  the  decrease  of  shipments  in  1920  as  compared  with  1919, 
were  challenged  by  U.  Larin,  in  the  Moscow  Pravda  of  June  15. 
Larin  claimed  that  the  shipments  during  the  spring  navigation  of 
1920  increased  almost  fourfold  as  compared  with  1919,  the  total  tonnage 
shipped,  according  to  him,  being  nearly  forty-five  million  pouds.  In 
replying  to  this  statement,  Mikhailov  showed,  in  the  Ekonomicheskaya 
Zhisn  of  June  20,  that  Larin's  figure  for  1919  (which  is  the  same  as 
Mikhailov's)  refers  to  shipments  actually  delivered,  while  the  figure 
for  1920  refers  to  cargoes  loaded  and  on  the  way,  thus  vindicating  his 
original   conclusion. 


TEANSPORTATION  135 

It  was  expected  that  the  first  period  of  the  navigation 
would  make  possible  the  moving  of  over  157,000,000 
pouds.  The  total  amount  loaded,  however,  up  to  June 
1  was  scarcely  over  fifty  million  pouds.  The  plan  for 
the  second  period  of  the  navigation  season  originally 
called  for  261,000,000  pouds,  but  it  was  later  on  re- 
duced to  about  180,000,000  pouds.*  The  second 
period,  however,  showed  considerable  improvement, 
largely  because  practically  half  of  all  the  oil  brought 
from  the  Caucasus  was  placed  at  the  disposal  of  the 
river  fleet,  thus  relieving  considerably  the  fuel  situation. 
Up  to  July  20,  the  total  shipments  on  the  Volga  system 
were  141,990,000  pouds,  and  the  deliveries  89,645,000 
pouds;  on  the  Mariinsk  system,  the  shipments  were 
83,753,000  pouds  and  the  deliveries,  76,413,000  pouds; 
on  the  Northern  system  the  shipments  and  the  deliveries 
were  a  little  over  fifty  million  pouds. f 

The  number  of  boats  used  on  the  Volga  system  for 
the  1920  navigation  was  as  follows:  181  passenger- 
freight  boats;  544  tugs;  1,940  barges  (131  in  repair).:}: 
In  other  words,  considering  the  loss  during  the  past 
three  years,  less  than  half  of  the  power  boats  which 
were  in  operation  on  the  system  before  the  Revolution 
were  actually  running  during  the  navigation  season  of 
1920.  Of  the  barges  available  even  after  the  losses, 
less  than  forty  per  cent,  were  in  use.  This  appears 
to  be  an  even  poorer  showing  than  with  the  railroads. 

And  just  as  with  the  operation  of  the  railroads,  on  the 
waterways  there  is  a  flagrant  lack  of  cooperation  be- 

♦  Ekonomicheskaya  Zhisn,  June  13,  1920. 
t  Ihld.,  August  8,   1920. 
t  Ibid.,  July   27,   1920. 


126  ECONOMICS  OF  COMMUNISM 

tween  the  departments  of  the  Government  requiring 
cargo  space  and  the  administration  of  the  watei-ways. 
There  is  a  failure  to  use  up  the  cargo  space  asked  for, 
similar  to  that  which  we  discussed  in  the  case  of  the 
railways.  Such  important  cargoes  as  fuel,  for  example, 
are  not  loaded  to  the  capacity  of  the  cargo  space  avail- 
able. An  example  of  this  kind  of  underloading  may 
he  seen  in  the  following  instance :  Cargo  space  was 
asked  of  the  administration  of  the  Volga  system  for  the 
shipping  of  143,850  barrels  of  cement.  This  cargo 
space  was  provided,  but  the  actual  loading  was  only 
15,042  barrels.* 

7.     The  Transportation  Budget 

The  budget  estimate  of  the  Commissariat  of  Ways 
of  Communication  was  not  actually  worked  out  for  the 
year  1920  until  July  of  that  year.  Up  to  that  time, 
the  Commissariat  simply  spent  money,  without  showing 
for  what  those  huge  sums  were  spent. 

Now,  what  does  it  cost  Soviet  Russia  at  the  present 
time  to  run  her  system  of  transportation?  It  is  to 
be  expected,  of  course,  that  this  cost  would  be  greater 
than  it  was  in  normal  times,  in  actual  monetary  units, 
since  the  rouble  has  become  depreciated  to  but  a  small 
part  of  its  noraial  value.  But  even  in  comparison 
with  the  preceding  two  years  of  the  Soviet  regime,  the 
management  of  the  Russian  railways  since  Trotsky 
took  it  over,  has  shown  a  tendency  for  a  stupendous 
increase  of  expenditures.  The  following  table  gives 
these  comparative  figures  of  the  transportation  budget 

•  Ekonomicheskaya  Zhisn,  July  27,  1920. 


TRANSPOETATION  127 

of  Soviet  Russia  as  far  as  the  railroad  system  alone 
is  concerned:* 

Table  No.  19 

Period                             Receipts  Disbursements  Deficit 

(in  millions  of  roubles) 

1st  half  of  1918 641  3,993  3,352 

2nd    "            "       413  3,750  3,307 

1st    "         1919    913  5,073  4,150 

2nd    "            "     1,651  10,826  9,175 

For   1920    18,954  70,220  51,26^ 

The  characteristic  features  of  the  budget  estimale  for 
1920  are  as  follows :  1.  The  increase  of  the  total  length 
of  the  railway  lines  to  ahnost  double  of  what  they  were 
in  1919 ;  2.  The  growth  of  expenditures  per  unit  of  op- 
erating lines  over  the  figures  for  1919  ;  3.  The  increase 
of  passenger  and  freight  rates  to  a  considerable  degTee. 

It  is  clear,  however,  that  the  increase  of  rates,  no 
matter  how  considerable,  has  not  been  sufficient  to 
even  approach  the  figure  of  the  disbursements.  Dur- 
ing the  whole  of  1919,  the  receipts  of  the  railways  were 
a  little  over  two  and  a  half  billion  roubles.  With  the 
doubling  of  the  system,  the  receipts  normally  would  be 
about  five  billion  roubles;  they  are  estimated  for  the 
year  1920  at  eighteen  billion  roubles,  or  an  increase 
of  about  350  per  cent.  At  the  same  time,  the  disburse- 
ments for  1919,  which  totaled  up  to  nearly  sixteen 
billion  roubles,  when  doubled  to  take  care  of  the  in- 
crease of  the  system,  represent  less  than  haK  of  the 

*  The  data  on  the  financial  situation  of  the  system  of  transportation 
Is  taken  from  a  statement  on  "The  Budget  Estimate  of  the  People's 
Commissariat  of  Ways  of  Communication,"  published  in  the  Ekono- 
micheskaya    Zhisn,   August    1,    1920. 


138  ECONOMICS  OF  COMMUNISM 

estimated  expenditures  for  1920.  There  is  little  won- 
der, then,  that  the  total  deficit  for  1920  is  more  than 
three  times  the  deficit  for  1919. 

The  last  available  figures  of  passenger  rates  in  Soviet 
Russia  refer  to  the  increases  ordered  on  December  1, 
1919.*  By  that  order  the  cost  of  travel  from  Petrograd 
to  Moscow  was  set  at  320  roubles;  to  Novgorod,  195 
roubles;  to  Vologda,  300  roubles;  to  Omsk,  7Y0 
roubles,  etc. 

During  the  present  year,  the  Kate  Division  for  the 
railways  and  the  waterways  was  taken  out  of  the  hands 
of  the  Commissariat  of  Finance  and  transferred  to 
the  Commissariat  of  Ways  of  Communication.  One 
of  the  first  results  of  this  transfer  was  the  introduction 
of  a  new  freight  tariff,  different  both  because  of  the 
increase  of  the  rates,  and  because  of  the  simplification 
of  the  classifications  used.  There  are  now  seven  main 
groups,  instead  of  over  one  hundred  classes  and  dif- 
ferentiations, as  formerly.  Even  the  special  nomencla- 
ture and  the  form  of  shipping  documents  formerly  in 
use  are  being  revised. 

The  largest  item  from  the  point  of  view  of  disburse- 
ments comprises  the  expenses  for  the  operation  of  rail- 
ways. In  1919  these  operation  expenses  were  13,945 
million  roubles;  in  1920  they  are  41,460  million  roubles. 
Expenses  entailed  by  the  war  (rebuilding,  repair,  etc.) 
call  for  five  billion  roubles  in  1920,  as  compared  with 
only  574  million  roubles  in  1919.  Railroad  improve- 
ments re<|uired  in  1920  two  and  a  half  billion  roubles,  as 
against  27  million  roubles  in  1919. 

The  total  annual  expenditures  for  one  verst  of  the 

*  Petrograd  Pravda,  December  2,  1919. 


TRANSPORTATION  139 

railway  lines  in  Central  Russia  are  estimated  for  1920 
at  800,000  roubles;  in  1919  the  corresponding  expendi- 
tures were  524,000  roubles,  while  in  1916,  on  the  state- 
owned  railroad  lines,  they  were  but  14,300  roubles. 
The  expenditures  for  each  verst  of  the  railroads  in 
South  Russia  are  taken  at  600,000  roubles,  and  corre- 
sponding expenditures  at  the  front,  at  400,000  roubles. 

This  considerable  increase  in  the  expenditures  on 
the  railway  system  is  accounted  for  in  the  Statement 
on  the  Budget  Estimate,  referred  to  above,  by  increases 
in  wages  and  in  the  cost  of  materials.  These  increases 
are  cited,  in  some  instances,  as  amounting  to  150  per 
cent.  Since  the  total  increase  of  the  expenditures  of 
the  railway  system  is  over  200  per  cent.,  it  is  clear  that 
the  cost  of  labor  and  of  materials  is  not  sufficient  to 
explain  the  whole  increase  in  the  disbursements.  A 
large  part  of  this  stupendous  increase,  resulting  in  a 
deficit  of  fifty  billion  roubles,  is  due  to  the  increase 
of  overhead  expenses. 


CHAPTER  II 


FUEL  AND  RAW  MATERIALS 


With  transportation  as  the  greatest  of  the  economic 
problems  and  difficulties  of  the  Soviet  regime,  the  ques- 
tion of  fuel  constitutes  the  second  problem  from  the 
point  of  view  of  importance  and  acuteness.  These  two 
problems,  with  the  (question  of  raw  materials  added  inci- 
dentally, constitute  the  great  mechanical  (as  contrasted 
with  the  human)  factors  of  the  Soviet  economic  regime. 
The  two  characteristic  features  of  the  fuel  and  the  raw 
material  situation  during  the  period  of  the  war  and^ 
particularly,  of  the  Revolution,  were,  first,  the  shortage 
of  both,  which  at  times  reached  the  stage  of  extreme 
acuteness,  and  second,  the  withdrawal  from  the  con- 
trol of  the  Central  Russian  authority  of  various  sources 
of  both  fuel  and  raw  materials,  in  the  case  of  the  former 
rendering  necessary  the  substitution  of  one  kind  for 
another. 

1.     The  Normal  Fuel  Situation 

With  all  her  inmiense  natural  wealth,  which  com- 
prises also  all  kinds  of  materials  that  can  be  used  as 
fuel,  Russia  has  never  had  a  really  adequate  supply 
of  fuel.  Although  it  is  true  that  before  the  war  she 
exported  certain  quantities  of  coal  and  petroleum,  it 

130 


FUEL  AND  EAW  MATERIALS  131 

is  also  true  that  she  imported  both  coal  and  petroleum 
products,  and  still  was  never  sufficiently  supplied  to 
take  care  of  her  needs. 

Coal  is  found  in  Russia  in  numerous  localities,  but 
not  all  the  deposits  are  available  for  work,  because  of 
lack  of  transportation  facilities.  The  most  important 
of  the  coal  fields,  the  Donetz  basin,  located  in  the  south- 
ern part  of  the  country  near  the  Sea  of  Azov,  produced 
normally  nearly  half  of  Russia's  consumption  of  coal. 
It  could  produce  more,  but  the  shipping  of  this  coal 
to  the  central  and  northern,  i.  e.,  the  industrially  devel- 
oped parts  of  Russia,  was  an  almost  insurmountable 
difficulty.  The  coal  had  to  be  shipped  by  rail  over 
very  large  distances,  since  the  waterways,  which  may 
some  day  be  available  for  this  purpose,  are  still  im- 
possible of  use.  Normally,  the  amount  of  coal  moved 
by  water  was  only  one-forty-sixth  of  the  amount  moved 
by  rail.  The  surplus  of  the  Donetz  production  of  coal 
was  exported,  particularly  to  Italy. 

The  other  localities  abounding  in  coal  were  Poland 
(the  Dombrow  basin),  the  province  of  Moscow,  the 
Urals,  Turkestan,  and  Siberia.  Of  these  localities  none 
was  important  from  the  point  of  view  of  production, 
although  the  coal  fields  in  Siberia  are  tremendously  im- 
portant from  the  point  of  view  of  possibilities.  The 
Kusnetzk  basin  in  Siberia,  for  example,  is  considered 
one  of  the  largest  coal  fields  in  the  world,  but  it  is 
neither  studied  adequately,  nor  connected  with  civiliza- 
tion by  any  means  of  transportation  on  even  a  fair 
scale. 

Petroleum  is  also  found  in  several  localities  and  in 
fairly   large  amounts.     Russia's  output  of   petroleum 


132  ECONOMICS  OF  COMMUNISM 

in  1913  was  nearly  twenty  per  cent,  of  the  total  world 
output,  second  only  to  that  of  the  United  States.  The 
most  important  petroleum  region  is  in  the  Caucasus, 
where  petroleum  is  obtained  in  four  localities.  There 
is  also  petroleum  in  the  Ural  Mountains  and  in  Turke- 
stan. Again,  just  as  with  coal,  some  of  what  are  be- 
lieved to  be  the  largest  oil  fields  are  not  worked,  be- 
cause of  lack  of  transportation  facilities.  Such  fields 
are  found  particularly  in  the  Transcaspian  Territory. 

Wood  is  found  in  many  parts  of  Russia,  although  the 
really  important  and  extensive  timberlands  are  found 
in  the  northern  part  of  European  Russia  and  in  Siberia. 
Again,  because  of  lack  of  transportation  facilities, 
some  of  the  largest  timber  tracts  are  still  inaccessible. 

Another  material  which  can  be  used  for  fuel  pur- 
poses is  peat,  found  in  the  marshy  and  lake  regions 
in  many  parts  of  central  and  northwestern  Russia. 
Before  the  war,  certain  amounts  of  peat  were  used  for 
industrial  purposes  around  Petrograd  and  Moscow  and 
for  home  fuel  in  some  parts  of  Lithuania  and  White 
Russia.  Scarcely  any  real  attention  was  paid,  however, 
to  the  fuel  possibilities  of  these  deposits  of  peat,  al- 
though their  amount  available  for  various  purposes  is 
larger  than  in  all  the  rest  of  Europe  put  together. 

Finally,  as  a  source  of  fuel,  Russia  is  abundantly 
supplied  with  potential  water  power,  or  "white  coal," 
of  which,  however,  very  small  use  is  being  made.  Of 
Russia's  potential  twelve  million  horsepower  of  "white 
coal"  (a  very  conservative  estimate),  scarcely  ten  thou- 
sand, or  eight-one-hundredths  of  one  per  cent.,  were  uti- 
lized. 

Normally,  the  most  important  source  of  fuel  was,  of 


FUEL  AND  EAW  MATEEIALS  133 

course,  coal.  In  1913,  its  consumption  was  well  over 
two  billion  pouds.  ISText  in  importance  was  petroleum, 
followed  by  wood. 

2.     The  Situation  During  the  War  and  the  Revolution 

The  war  played  havoc  with  much  of  the  fuel  situation 
in  Russia,  particularly  as  far  as  coal  was  concerned. 
Eoughly  speaking,  half  of  Russia's  total  coal  supply 
was  furnished  by  the  Donetz  basin,  a  quarter  was  sup- 
plied by  the  Dombrow  basin  and  the  other  fields,  and 
the  last  quarter  was  imported  from  England  through 
the  ports  of  the  Baltic  Sea.  After  the  war  began,  the 
importation,  naturally,  came  to  an  end.  The  Dom- 
brow basin  was  lost  to  the  Germans  together  with  the 
rest  of  Poland  also  in  the  early  stages  of  the  war. 
On  the  other  hand,  the  exportation  of  coal  from  the 
south  to  Italy  also  was  stopped  with  the  closing  of  the 
Dardanelles.  The  whole  output  of  the  Donetz  basin 
could  then  be  diverted  to  internal  use.  But  this  was 
rendered  difiicult  because  of  transportation.  However, 
that  problem  was  solved  somewhat,  and  the  Donetz 
basin  fields  came  to  supply  nearly  eighty  per  cent,  of 
Russia's  total  consimiption  of  coal. 

Nevertheless,  a  fuel  crisis  was  inevitable.  It  began 
to  show  the  first  signs  of  development  late  in  1915  and 
in  1916,  and  reached  its  acutest  stage  in  1919.* 

Early  in  1920,  in  making  up  the  fuel  estimate  for 
the  year,  the  Technical  Division  of  the  Chief  Fuel  Com- 
mittee computed  the  consumption  of  fuel   in  Russia 

*  Ekonomicheskaya  Zhisn,  July  6,   1920. 


134  ECONOMICS  OF  COMMUNISM 

during'  the  years  following-  the  beginning  of  the  crisis.* 
These  figiires,  shown  in  Table  No.  1,  cover  the  thirty- 
one  Governments  of  Central  Russia  and  the  Volga  sec- 
tion. All  forms  of  fuels  are  converted  into  their  equiv- 
alents in  wood,  and  the  unit  of  measure  taken  is  the 
cubic  sazhen  (one  sazhen  is  equal  to  seven  feet). 

Table  No.  1 
Year  Total  amount  of  fuel 

(in  cu,  sazhen) 

1916 17,019 

1917 13,046 

1918 9,497 

1919 7,115 

According  to  the  same  computation,  the  "starvation 
minimum,"  i.  e.,  the  amount  considered  absolutely  es- 
sential to  the  life  of  the  country,  is  from  ten  to  eleven 
million  cubic  sazhen,  again  converting  all  forms  of 
fuel  into  their  equivalent  in  wood.  Thus,  1917 
was  the  last  year  in  which  Russia  still  had  anything 
approximating  what  is  considered  the  absolute  minimum 
of  fuel.  The  chief  reason  for  that  was,  of  course, 
that  1917  was  the  last  year  during  which  Russia  still 
retained  uninterrupted  possession  of  her  principal 
source  of  coal  supply,  viz.,  the  Donetz  basin.  In  1918, 
the  Donetz  basin  was  captured  by  the  Germans  during 
the  invasion  of  Southern  Russia,  while  after  the 
armistice  it  fell  into  the  hands  of  Petlura's  Ukrainian 
Government.  It  was  not  recaptured  by  the  Bolsheviki 
until  early  in  1919,  and  in  the  summer  of  that  year 
was  again  lost  by  them,  this  time  to  General  Denikin's 

*  Ekonomicheskayn  Zhisn,  February  17,   1920.     Figures  contained  in 
Tables  1,  2,  and  3  are  taken  from  this  source. 


FUEL  AND  RAW  MATERIALS  135 

Volunteer  Army.  It  was  not  recovered  bj  the  Soviet 
Government  until  late  in  tlie  spring  of  1920. 

Precisely  the  same  thing  happened  to  the  petroleum 
fields,  for  the  possession  of  the  Caucasus  oil  fields  cor- 
responded chronologically  almost  exactly  with  the 
changes  in  the  possession  of  the  Donetz  basin.  The 
only  difference  was  that  there  were  comparatively 
larger  stock  supplies  of  oil  than  of  coal  in  Central 
Russia. 

Efforts  were  made  to  increase  the  amounts  of  wood 
prepared  for  use,  but  these  efforts  were  of  no  avail. 
In  spite  of  the  fact  that  wood  became  the  only  kind 
of  fuel  available  at  all  periods,  since  the  timberlands 
of  Central  and  N^orthern  Russia  were  most  of  the  time 
in  the  hands  of  the  Soviet  Government  (except  in  the 
Archangel  territory),  the  amount  of  wood  prepared  for 
use  and  used  not  only  did  not  increase,  but  actually 
decreased.  And  this,  too,  in  spite  of  the  fact  that  at 
the  end  of  1918  and  all  through  1919,  practically  all 
the  factories,  locomotives  and  power  boats  had  to  use 
only  wood  and  had  their  machinery  adapted  to  its  use. 

The  following  table  shows  the  relative  amounts  of 
the  different  kinds  of  fuel  used  during  this  period : 

Table  No.  2 
Kinds  of  Fuel  Used 

Year  Donetz  Coal  Petroleum  Wood 

(in  thousands  of  pouds)      (inthous.  of 

cu. sazhen) 

1916 506,498       230,597      7,783 

1918 126,960        83,052      6,490 

1919 100       25,580      6,317 


136  ECONOMICS  OF  COMMUNISM 

Finally,  in  the  next  table,  we  see  how  these  amounts 
of  fuel  were  allotted  among  the  different  categories 
of  consumption  through  these  years,  and  which  cate- 
gories suffered  most  because  of  the  growing  acuteness 
of  the  crisis: 

Table  No.  3 

The   Categories  of  Fuel  Consumption 

(All  kinds  of  fuel  converted  into  equivalent  in  wood.) 

1916          1917  1918         1919 

(in  thousands  of  cu.  sazhen) 

Population  in  the  cities 2,256        2,500  2,517         1,500 

Water   and   light 541            478  352            273 

Industry 5,247        4,076  3,221        2,107 

Transportation   8,975         5,992  3,407         3.275 

The  conditions  of  life  for  the  civilian  population  in 
the  cities,  due  to  the  shortage  of  fuel,  may  be  seen  clearly 
from  the  first  two  categories  in  Table  No.  3.  Both  as 
far  as  home  heating,  and  water  and  light  supply  were 
concerned,  the  Russian  cities,  even  in  1916,  were  al- 
ready in  a  condition  closely  approaching  critical.  The 
further  reductions  in  the  amount  of  fuel  available  for 
these  two  purposes,  as  shown  in  the  table,  are  clearly 
indicative  of  those  unimagined  sufferings  because  of 
cold  and  exposure  that  have  been  reported  from  Russia 
during  the  past  three  years.  And  it  must  be  remem- 
bered, moreover,  that  these  official  computations  are 
hardly  minima,  but  are  more  likely  to  be  maxima;  so 
that  the  actual  situation  was,  probably,  even  worse 
than  is  pictured  here. 

As  for  the  decrease  in  the  amount  of  fuel  supplied 
to  the  industries  and  the  means  of  transportation,  there 


FUEL  AND  EAW  MATEEIALS  137 

is  no  doubt  that  it  is  partly  cause  and  partly  effect. 
The  breakdown  of  both  the  industries  and  the  means 
of  transportation  was  due  to  other  causes,  as  well  as 
lack  of  fuel,  so  that  in  any  event,  they  would  not  have 
needed  during  the  years  of  the  acute  crisis  the  amounts 
which  they  noimally  consumed. 

In  making  their  fuel  estimate  for  the  year  1920,  the 
Soviet  authorities  had  two  possibilities  in  mind.  The 
first  was  based  on  the  continuation  of  the  same  fuel 
resources  as  were  available  in  1919,  meaning  another 
year  of  fuel  crisis  that  would  be  just  as  acute  as  during 
the  preceding  year.  The  second  was  conditioned  on 
a  decisive  victory  on  the  southern  front  against  General 
Denikin  and  the  consequent  acquisition  of  the  Donetz 
coal  basin  and  the  Caucasus  oil  fields.* 

The  first  estimate  is  based  almost  entirely  on  wood, 
the  expected  amount  of  which  is  given  at  a  somewhat 
higher  figure  than  the  amount  actually  obtained  in 
1919.  The  amount  of  petroleum  appearing  in  the  first 
estimate  represents  the  actual  stocks  on  hand.  The 
coal  figuring  in  it  was  expected  from  the  Moscow  and 
the  Ural  basins. 

In  the  second  estimate,  conditioned  on  a  victory  in 
the  South,  the  amount  of  petroleum  is  very  considerable, 
because  the  Caucasus  fields  have  been  preserved  in 
rather  good  condition.  The  coal  output  is  also  given 
at  a  rather  high  figure  both  for  the  Donetz  basin  and 
for  the  Moscow  basin.  Even  the  expected  amount  of 
wood  is  given  at  a  higher  figTire  in  the  expectation  that 
the  increase  in  the  amounts  of  coal  and  petroleum  would 

♦  The  figures  for  the  two  estimates  and  the  incidental  explanations  are 
taken  from  the  Ekonomicheskaya  Zhisn,  February  17,  1920. 


138  ECONOMICS  OF  COMMUNISM 

improve  transportation  and  render  the  carrying  of  wood 
easier.  The  following  table  shows  these  two  estimates 
for  1920  in  detail: 

Table  No.  4 

A.     First  Estimate 

Petroleum    2.5  millioii  pouds 

Coal  (Ural  basin)  

"       (Moscow)    31.2         "  " 

Peat    70.2         "  " 

Wood 7.9        "      cubic  sazhen. 

Total  (converted  into  equivalent 

in  wood)   8.7  million  cubic  sazhen. 

B.     Second  Estimate 

Petroleum 125  million  pouds 

Coal  (Donetz,  etc.) 300        "  " 

(Moscow)    60        "  " 

Peat   100         "  " 

Coke 3.3      " 

Wood    8.5      "       cubic  sazhen. 

Total   (converted  into  equivalent 

in   wood)    13.3  million  cubic  sazhen. 

The  first  estimate  would  give  the  country  enough 
fuel  to  supply  fifteen  to  twenty  per  cent,  less  than  the 
"starvation  minimum,"  while  the  second  estimate 
would,  apparently,  exceed  this  "minimum"  by  about 
the  same  percentage. 

The  difference  in  the  distribution  for  the  different 
categories  of  consumption  would  be  as  follows:  under 
the  first  estimate,  the  population  in  the  cities  would  re- 


FUEL  AND  EAW  MATEEIALS  139 

ceive  one  and  a  half  million  cubic  sazhen;  under  the 
second  estimate,  two  and  a  fifth  million.  Transporta- 
tion, under  the  first  estimate,  would  be  given  4.6  million 
cubic  sazhen;  under  the  second  estimate,  5.7  million. 
Industry  was  expected  to  be  the  real  winner  if  the 
second  estimate  could  be  carried  out:  its  allotment 
under  the  first  estimate  was  2.6  million  cubic  sazhen, 
and  under  the  second,  5,4  million. 

But  it  must  be  remembered  that  this  improvement 
under  the  second  estimate,  presumably  shown  by  the 
increase  in  the  absolute  figures,  is,  in  reality,  no  im- 
provement at  all.  With  the  acquisition  of  the  coal  and 
petroleum  fields  in  the  south  of  Russia,  the  Soviet  Gov- 
ernment would  also  acquire  control  over,  and  conse- 
quently assume  responsibilities  with  regard  to  the  fuel 
supply  for  a  very  large  territory,  i.  e.,  practically  the 
whole  of  what  was  foraierly  European  Russia,  instead 
of  only  the  central,  northern  and  eastern  parts  of  it. 
The  fuel  requirements  of  the  territory  which  the  second 
estimate  would  obviously  cover  would  be  very  much 
larger  than  those  of  the  territory  covered  by  the  first 
estimate.  This  difference  will  become  perfectly  ap- 
parent from  the  following  comparison  of  figures:  in 
1916  the  fuel  requirements  of  the  whole  of  European 
Russia  for  the  three  categories  of  consumption  under 
consideration  (the  population  in  the  cities,  transporta- 
tion and  industry)  was  thirty-five  million  cubic  sazhen, 
with  all  forms  of  fuel  converted  into  their  equivalent  in 
wood ;  the  requirements  of  the  thirty-one  Governments 
to  which  the  original  estimate  applies,  was  only  about 
seventeen  million  cubic  sazhen,  or  less  than  half.* 

*  Ekonomicheskaya   Zhisn,   February    17,    1920. 


140  ECONOMICS  OF  COMMUNISM 

The  outcome  of  the  military  operations  on  the  south- 
ern front  brought  about  conditions  in  which  the  second 
estimate  is  the  one  which  must  be  carried  out  during 
the  year  1920.  But  as  we  have  seen,  if  carried  out 
in  full,  it  can  no  more  provide  even  the  "starvation 
minimum"  of  fuel,  than  can  the  first  estimate  for  its 
limited  ten'itory;  and  possibly  it  cannot  do  even  as 
well. 

3.     The  Fuel  Situation  in  1920 

In  the  course  of  the  first  half  of  1920  the  fuel  situ- 
ation again  assumed  the  character  it  had  in  1916  and 
1917  from  the  point  of  view  of  control  by  the  central 
government  of  all  the  sources  of  different  kinds  of  fuel. 
During  this  period  all  the  coal  and  oil  fields  of  Euro- 
pean and  Asiatic  Russia,  as  well  as  all  the  timberlands, 
passed  again  under  the  control  of  the  Moscow  Govern- 
ment. Almost  complete  figures  are  available  for  the 
work  of  some  of  the  sources  of  fuel  supply  for  the  first 
six  months  of  1920 ;  these  data  are  given  below,  sepa- 
rately for  each  kind  of  fuel.* 

Coal.  Of  greatest  interest  and  importance  in  the 
consideration  of  the  coal  situation  is  the  work  and  the 
output  of  the  Donetz  basin.  The  following  table  shows 
the  output  of  this  basin  for  the  first  six  months  of 
1920,  with  comparative  figures  for  the  corresponding 
period  of  1913,  representing  the  normal  situation,  and 
of  1919: 

•  These  figures  are  taken  from  a  report  on  the  fuel  situation  during 
the  first  four  months  of  the  year  in  a  special  issue  of  the  Ekonomiches- 
kaya  Zhisn,  June  24,  1920,  and  a  revised  report  covering  the  first  six 
months  of  the  year,  published  in  a  similar  edition  of  Ibid.,  July  27,  1920. 


FUEL  AND  RAW  MATERIALS  141 

Table  No.  5 

The  Output  of  the  Donetz  Basin 

(Coal  and  anthracite) 

1913         1919  1920 

(in  thousands  of  pouds) 

January- April    500,000    117,200      71,400 

May    133,900      14,700       19,400 

June 119,000       19,100       25,500 

Total 752,900     151,000     116,300 

Thus,  the  output  of  the  most  important  coal  basin 
was,  during  the  first  six  months  of  1920,  seven  times 
less  than  the  output  for  the  corresponding  period  of 
1913.  Even  in  comparison  with  1919,  there  is  a  con- 
siderable decrease  of  output,  amounting  to  23  per  cent. 
This  decrease  is  particularly  noticeable  in  comparing 
the  figures  for  the  first  four  months  of  1919  and  1920. 
On  the  other  hand,  the  output  for  May  and  June  is 
larger  in  1920  than  in  1919.  The  explanation  of  these 
variations  in  the  output  during  1919  and  1920  lies  in 
the  mechanical  factor  of  the  variation  of  the  number  of 
workmen  engaged  in  mining  in  the  basin.  The  average 
number  of  workmen  for  the  first  four  months  of  1919 
was  111,200,  while  the  average  for  the  same  period  in 
1920  was  only  94,400,  On  the  other  hand,  the  number 
of  men  employed  at  the  mines  in  May  and  June  of 
1919  was  78,700  and  85,100,  respectively,  while  the 
corresponding  fig-ures  for  1920  were  108,000  and 
117,000.* 

•  The  question  of  labor  In  the  Donetz  basin,  as  well  as  in  the  other 
coal  regions,  particularly  with  regard  to  productivity,  will  be  taken  up 
in  detail  under   "Labor." 


142  ECONOMICS  OF  COMMUNISM 

Evan  in  comparison  with  the  estimated  amounts, 
expected  from  the  Donetz  basin  according  to  the  Fuel 
Estimate  for  the  year,  the  actual  output  is  not  large 
enough.  The  estimate  covering  these  six  months  called 
for  130,000,000  pouds  (about  half  of  the  amount 
expected  during  the  whole  year,  as  shown  in  Table 
No.  4).  The  actual  output  was  a  trifle  less  than  90 
per  cent,  of  the  estimate. 

However,  the  situation  in  the  Donetz  basin  has  not 
been  normal  since  19 lY,  for  the  territory  in  which  it 
lies  has  passed  back  and  forth,  from  hand  to  hand, 
several  times  during  the  last  stages  of  the  world  war, 
and  particularly  during  the  civil  war.  The  unevenness 
and  the  abnormality  in  its  production  are  attributable 
in  some  degree  to  the  exigencies  of  the  war.  But  when 
we  come  to  the  Moscow  basin,  situated  in  the  very 
heart  of  Central  Russia,  we  are  no  longer  dealing  with 
the  direct  effects  of  such  exigencies.  Table  No.  6  shows 
the  output  of  this  basin  for  the  first  half  of  1920.* 

Table  No.  6 
The  Output  of  the  Moscow  Basin 

1916        1919  1920 

(in  thousands  of  pouds) 

January- April    13,055         9,835       10,610 

May    2,670        1,820        2,461 

June 3,360         1,532         3,091 

Total  19,085       13,187       16,162 

*  The  reason  why  the  year  1916  is  taken  here  as  a  basis  for  com- 
parison is  that  little  attention  was  paid  to  the  Moscow  basin  before 
the  war,  its  deposits  being  of  an  inferior  quality  and  not  very  extensive. 


FUEL  AND  RAW  MATERIALS  143 

Thus,  the  Moscow  basin  shows  an  increase  of  22.5 
per  cent,  in  its  total  output  in  1920  as  compared  with 
the  corresponding  period  of  1919.  The  output  is  still 
smaller  than  the  amount  of  coal  extracted  in  1916,  but 
it  is  approaching  the  figure  for  that  year,  being  now 
only  15  per  cent,  below  it. 

This  more  or  less  satisfactory  condition  of  produc- 
tion in  the  Moscow  basin,  however,  was  obtained  at  a 
price  which  is  truly  stupendous,  considering  the  existing 
economic  situation :  the  price  of  diverting  to  the  coal 
pits  of  three  times  as  many  men  as  were  working  there 
in  1916.  The  average  number  of  workmen  in  the 
Moscow  basin  during  the  first  six  months  of  1916  was 
5,440;  the  average  for  the  first  six  months  of  1920 
was  14,200. 

The  Moscow  coal  basin,  located  near  the  capital,  was 
in  an  uninterrupted  possession  of  the  Soviet  Govern- 
ment, and,  consequently,  under  the  direct  supervision 
of  the  higher  economic  authorities.  Yet,  it  has  not  only 
failed  (in  spite  of  the  trebling  of  the  number  of  work- 
men) to  equal  the  output  of  1916,  but  has  not  even 
come  up  to  the  estimate  for  1920.  Turning  back  to 
Table  No.  4,  we  find  that  the  allotment  for  the  Moscow 
basin  in  the  first  estimate  is  over  31,000,000  pouds. 
The  actual  production  approximately  corresponds  to 
this  estimate.  But  the  allotment  in  the  second  esti- 
mate (which  is  the  one  that  the  Soviet  Government 
finds  it  necessary  to  carry  out),  is  sixty  million  pouds, 
which  makes  the  actual  output  of  the  Moscow  basin 
only  somewhat  over  50  per  cent,  of  the  estimate. 


144  ECONOMICS  OF  COMMUNISM 

The  output  of  the  other  coal  fields  shows  practi- 
cally the  same  characteristics  as  in  the  two  basins  we 
have  considered.  In  the  Urals,  for  example,  the  Kisel 
basin,  which  has  been  under  exploitation  for  some 
time,  yielded  during  the  first  half  of  1920,  7,670,000 
pouds  of  coal,  as  against  31,836,000  ponds  in  1916. 
On  the  other  hand,  the  Cheliabinsk  field,  the  exploita- 
tion of  which  has  begun  only  recently,  yielded  in  1920, 
14,811,000  pouds  of  coal,  as  against  3,227,000  pouds 
in  1916.  The  various  fields  in  Siberia  yielded  compara- 
tively small  amounts  of  coal,  which,  moreover,  is  needed 
there  for  local  consumption.  All  these  basins,  just  as 
the  Donetz  basin,  though  not  to  the  same  degi-ee,  have 
been  directly  afi^ected  by  the  exigencies  of  the  civil  war. 

The  following  table  shows  the  total  coal  production 
for  the  whole  of  Russia  under  the  control  of  the  Soviet 
Government,  during  the  first  half  of  1920  : 

T.4BLE  No.  7 

Total  Coal  Output,  January-June,  1920 

Name  of  Basin  Amount 

Donetz 116,300,000  pouds 

Moscow 16,162,000     " 

Ural   27,970,000     " 

Siberia    27,124,000     " 

Total 187,556,000  pouds 

Barring  the  Siberian  coal,  the  output  for  European 
Russia  is  about  160,000,000  pouds,  or  about  ten  per 
cent,  less  than  the  larger  fuel  estimate  for  1920. 

Petroleum.  The  really  important  oil  fields  did  not 
come  under  the  control  of  the  Soviet  Government  until 


FUEL  AND  EAW  MATERIALS  145 

late  spring,  1920,  so  that  tlie  first  half  of  the  year  can- 
not show  anything  from  the  point  of  view  of  the  out- 
put. In  June,  the  Chief  Committee  on  Petroleum 
worked  out  a  plan  of  work  for  the  remainder  of  1920, 
giving  an  estimate  of  the  expected  output  of  the  differ- 
ent oil  fields  and  the  work  of  the  refineries. 

According  to  this  estimate,*  the  total  output  of  all 
the  oil  fields  under  exploitation  during  the  seven-month 
period  from  June  1,  1920,  to  January  1,  1921,  should 
have  been  196,200,000  pouds  of  crude  oil.  In  1913, 
the  total  output  of  these  fields  for  the  whole  year  was 
561,000,000  pouds.  Of  the  amount  expected  in  1920, 
the  Baku  district  in  the  Caucasus  was  allotted  150,000,- 
000  pouds.  The  two  other  oil  fields  in  the  Caucasus, 
the  Grozny  and  the  Kuban,  were  expected  to  yield 
3,500,000  and  1,000,000  pouds  respectively.  The  Emba 
fields  in  the  Urals  were  expected  to  yield  8,000,000 
pouds,  and  the  Ferghana  district  in  Turkestan_, 
2,200,000  pouds. 

Considering  the  amounts  of  crude  oil  on  hand,  par- 
ticularly in  Baku  (the  production  prior  to  occupation 
by  Soviet  troops  was  so  large,  that  all  the  tanks  were 
full  and  work  had  to  be  stopped  at  intervals),  the  total 
amount  of  petroleum  to  be  supplied  to  the  refineries 
near  the  oil  fields  was  estimated  as  262,000,000  pouds. 

The  shipping  of  petroleum  to  Austrakhan  for 
reshipment  up  the  Volga,  began  from  the  port  of 
Petrovsk  on  the  Caspian  Sea  at  the  end  of  April,f 
and  from  Baku  at  the  beginning  of  May.     During  the 

•  Ekonomicheskaya  Zhisn,  July  1,  1920. 

t  The  data  concerning  the  shipments  of  petroleum  and  its  products 
Ib  taken  from  a  report  on  the  petroleum  situation,  published  in  a  special 
edition  of  Ekonomicheskaya  Zhisn,  June  24,  1920. 


146  ECONOMICS  OF  COMMUNISM 

month  of  May,  over  fourteen  million  pouds  of  petro- 
leum and  its  products  were  shipped  by  sea  from  Baku 
to  Astrakhan,  the  amount  actually  brought  to  the  latter 
port  by  May  29  being  7,779,500  pouds.  But  even  the 
arriving  shipments  could  not  be  unloaded,  for  the  facili- 
ties for  reshipment  in  Astrakhan  were  found  to  be  in 
such  condition  that  not  more  than  about  300,000  pouds 
could  be  unloaded  a  day.  In  order  to  make  possible 
the  reshipment  of  the  Baku  oil,  the  shipments  from 
Petrovsk  were  ordered  temporarily  stopped  altogether. 
As  for  reshipments  from  Astrakhan,  during  the  last 
three  weeks  in  May,  the  amount  of  petroleum  and  its 
products  actually  shipped  was  5,645,000  pouds. 

Attempts  were  made  during  the  month  of  May  to 
organize  shipments  of  petroleum  from  the  Grozny  dis- 
trict by  rail,  but  these  attempts  failed  because  of  the 
condition  of  railroad  transportation.  Moreover,  the 
needs  of  the  districts  adjacent  to  Grozny  are  so  great 
that  most  of  the  oil  yielded  by  the  fields  there  is  diverted 
to  local  use. 

The  production  of  oil  in  the  Baku  district  is  shown 
on  page  127  in  Table  No.  8,  taken  from  an  official  re- 
port of  the  Chief  Committee  on  Petroleum.* 

The  decline  of  production  after  April  is  most  signifi- 
cant, because  it  was  during  the  spring  of  1920  that  the 
Baku  oil  wells  came  into  the  possession  of  the  Soviet 
Government. 

Wood.  The  question  of  wood  is  more  or  less  a  local 
one:  wood  is  gathered  and  prepared  for  fuel  use  prac- 
tically    wherever     found.      Each     enterprise     makes 

•  Ekonomicheskaya  Zhisn,   October  16,   1920. 


FUEL  AND  EAW  MATERIALS  147 

Table  No.  8 

Baku  Oil  Output 

In  millions  of  pouds 

January,  1920 18.2 

February  17.5 

March    19-3 

April    1'7.9 

May    16.5 

June 15.1 

July    13.3 

August    12.2 

September    10.9 

attempts  as  far  as  possible  to  satisfy  its  own  needs  in 
wood  fuel,  using  special  labor  detachments  for  this  pur- 
pose. In  the  sections  of  the  country  abounding  in  for- 
ests, special  work  is  done  on  the  gathering  and  prepara- 
tion of  wood  for  fuel.  Most  of  the  work  of  the  labor 
armies  organized  at  the  beginning  of  1920  was  devoted 
to  the  task  of  gathering  wood.  Much  of  the  work  of 
transportation  is  devoted  to  the  carting  of  wood,  which, 
of  course,  is  a  rather  thankless  task,  since  wood  occu- 
pies much  cargo  space  and  has,  in  comparison  with 
other  forms  of  fuel,  very  little  calorific  value. 

However,  the  question  of  wood,  from  the  point  of 
view  of  the  fuel  situation,  is  a  very  important  one. 
Even  in  1916,  with  the  production  of  both  the  coal  fields 
and  the  oil  fields  almost  normal,  wood  constituted  over 
40  per  cent,  of  the  total  amount  of  fuel  used.  In  1919, 
it  was  practically  the  only  kind  of  fuel  available.  In 
the  smaller  fuel  estimate  for  1920,  it  constitutes  90  per 
cent,  of  the  total,  and  in  the  larger  estimate,  65  per  cent. 

The  total  amount  of  wood  expected  to  be  gathered  for 


148  ECONOMICS  OF  COMMUNISM 

use  during  1920  was  considerably  larger  than  the 
amount  actually  obtained  in  1919.  But,  while  no  gen- 
eral figTires  for  the  situation  in  1920  are  available,  such 
an  increase  seems  entirely  possible,  owing  to  an  increase 
in  the  total  territory  under  the  control  of  the  Soviet 
Government. 

Peat.  As  has  already  been  stated,  peat,  while  found 
in  large  quantities  in  Russia,  never  constituted  an 
important  item  from  the  point  of  view  of  fuel.  Its 
extraction  and  conversion  into  forms  suitable  for  indus- 
trial and  heating  purposes  is  found  in  many  localities 

In  1919  there  were  thirty-two  fairly  well  organized 
districts  of  peat  exploitation.*  The  number  of  peat- 
pressing  machines  in  these  various  districts  was  882 
They  were  operated  by  946  ''artels,"  f  and  the  total 
output  for  the  year  in  these  districts  was  67,039,000 
pouds. 

The  number  of  machines  available  for  1920  in  all 
these  districts  is  1,266,  of  which  only  887  were  in  actual 
operation  during  the  month  of  May,  when  the  work 
began  for  the  season  of  1920.  The  number  of  "artels" 
working  was  1,018,  although  it  was  expected  that  1,308 
would  be  working.  The  output  of  peat  up  to  June  1 
was  8,715,000  pouds.  The  total  amount  expected  for 
the  season  is  97,570,000  pouds.:}: 

*  Ekonomicheskaya    Zhisn,    June    24,    1920. 

t  An  "artel"  is  any  company  of  workmen,  performing  together  a 
certain  piece  of  worlc,  being  paid  as  a  company  and  dividing  the  wages 
among  themselves.  In  peat-production,  an  "artel"  usually  consists  of 
•ixty  people,  men  and  women,  of  whom  thirty  are  peat  extractors,  twenty 
are  driers,  and  ten  are  technical  personnel. 

t  These  figures  are  also  taken  from  Ekonomicheskaya  Zhisn,  June  24, 
1920.  The  number  of  machines  in  operation  is  taken  for  nineteen  ol 
the  thirty-two  districts,  no  information  being  available  about  the  other 


FUEL  AND  RAW  MATERIALS  l-i9 

The  importance  of  peat  is  almost  entirely  local.  In 
most  cases  it  is  converted  into  fuel  by  the  factories 
requiring  it  themselves.  Very  little  peat  fuel  is  moved 
to  other  localities  than  those  of  production,  so  that  it 
does  not  play  an  important  part  in  the  fuel  economy  of 
the  v^hole  country. 

Fuel  Shortage.  Judging  by  the  reports  on  the  output 
of  the  various  kinds  of  fuel  during  the  first  half  of 
1920,  which  we  summarized  in  this  section,  this  output 
is  scarcely  sufficient  to  satisfy  even  the  "starvation 
minimum"  of  fuel  requirements.  The  consequence  of 
this  is,  of  course,  two-fold:  the  continuation  of  suffer- 
ing on  the  part  of  the  city  population  because  of  lack 
of  fuel,  and  difficulties  in  transportation  and  industry. 
In  the  latter  case  the  two  aspects  of  the  situation, 
transportation  and  industry,  are,  naturally,  interde- 
pendent. 

Transportation  suffers  botli  because  insufficient  fuel 
is  provided  for  the  running  of  the  locomotives  and 
the  power  boats  which  are  still  in  working  order,  and 
because  through  the  lack  of  fuel  the  foundries  and 
repair  shops  charged  with  the  work  of  the  rehabilita- 
tion of  the  rolling  stock,  cannot  work  at  full  speed, 
partly  for  the  reason  that  not  enough  fuel  is  transported 
to  them.  Industry  suffers  directly  through  shortage  of 
fuel. 

If  we  take  the  most  important  industries  during  the 
period  under  consideration,  we  shall  find  fuel  shortage 

districts.  The  districts  taken,  however,  constitute  the  most  important 
part  of  the  industry,  as  they  contain  over  ninety  per  cent  of  the  total 
number  of  machines  available  for  the  year.  Therefore,  the  condition 
of  these  nineteen  districts  may  be  considered  as  representing  the  whole 
situation. 


150  ECONOMICS  OF  COMMUNISM 

a  common  complaint  with  all  of  them.  In  the  metal- 
lurgical industry,  the  Kolomna  locomotive  and  machine 
works  and  the  Mytishchinsk  car  works  were  not  running 
at  all  during  the  month  of  March  because  of  lack  of 
fuel.  The  production  of  the  Kulebaksky  and  the 
Vyksunsky  iron  works  was  reduced  almost  to  nothing 
for  the  same  reason.  The  production  of  the  Kolchugin 
copper  works  (the  largest  in  Russia)  was  reduced  very 
greatly  in  February  because  of  lack  of  fuel,  but 
improved  somewhat  in  March,  because  special  efforts 
were  made  to  supply  it.  Only  those  works  which  are 
supplied  with  wood  gathered  in  more  or  less  immediate 
vicinity  experience  fewer  difficulties  in  the  question 
of  fuel.* 

Since  the  metallurgical  industry  is  by  far  the  most 
important  branch  of  industry,  particularly  at  the  pres- 
ent time  when  upon  its  work  depends  the  rehabilitation 
of  the  transportation  system,  it  is  quite  natural  that,  if 
even  it  experiences  a  shortage  of  fuel  which  at  times 
reaches  catastrophic  acuteness,  other  branches  of  indus- 
try fare  still  worse  in  this  regard. 

Jf.    The  Raw  Materials 

While  theoretically,  Russia  is  able  to  supply  herself 
from  her  own  treasure  house  of  natural  wealth  with 
practically  every  kind  of  materials  needed  for  economic 
life  (with  very  few  tropical  exceptions),  in  reality  she 
has  not  been  able  to  rely  on  her  own  resources  even 
when  materials  of  which  she  has  an  abundance  were 
concerned.     It  is  true  that  a  considerable  part  of  her 

•  Ekonomicheskaya  Zhisn,  June  24,  1920. 


FUEL  AND  RAW  MATERIALS  151 

normal  export  trade  consisted  of  raw  materials  and 
half -finished  goods;  in  1913  this  group  of  her  export 
trade  constituted  thirty-seven  per  cent,  of  the  total. 
But  it  is  also  true  that  much  of  her  import  trade  also 
comprised  raw  materials,  with  which  she  could  have 
supplied  herself  did  she  have  the  necessary  degree  of 
economic  development. 

Since  this  is  so,  then  it  is  quite  obvious  that  the  war 
which  caused  an  interruption  and  a  considerable  shift- 
ing in  the  import  trade  of  Russia,  particularly  as  far  as 
the  categories  of  imported  articles  were  concerned,  and 
especially  the  civil  war,  in  the  course  of  which  Soviet 
Russia  was  blockaded,  have  played  havoc  with  the  situ- 
ation there  as  regards  the  supplies  of  raw  materials. 
And  this  situation  still  continues  to  be  one  of  a  serious 
nature. 

It  must  be  remembered,  too,  that  there  are  other 
factors  in  this  situation,  besides  the  fortunes  of  for- 
eign trade.  After  all,  with  all  her  extensive  imports 
of  raw  materials,  Russia  supplied  the  greater  part  of 
them  herself.  So  that  the  shortage,  as  we  shall  see 
below,  is  due  also,  and  very  prominently,  to  internal 
causes. 

With  one  or  two  exceptions,  there  is  a  shortage  of 
raw  materials  in  practically  every  industry  in  Soviet 
Russia  to-day.  Without  going  into  detail,  which  would 
scarcely  present  any  value  in  view  of  the  obvious  nature 
of  the  whole  situation,  we  shall  give  a  general  state- 
ment of  the  condition  of  some  of  the  principal  branches 
of  industry  with  regard  to  their  supplies  of  raw  mate- 
rials, using  this  information  as  merely  illustrative  of 
the  whole  economic  situation  of  the  country. 


152  ECONOMICS  OF  COMMUNISM 

Metals.  Russia's  import  of  metals  consisted  mostly 
of  machinery.  Comparatively  small  amounts  of  un- 
worked  metals  were  brought  into  the  country.  This 
is  pai'ticularly  true  of  iron;  for  Russia's  own  iron 
resources  are  tremendous.  However,  as  far  as  Soviet 
Russia  is  concerned,  these  resources  were  not  available, 
except  at  very  short  intervals,  in  the  course  of  the  latter 
part  of  1918  and  all  through  1919,  i.  e.,  during  the 
civil  war.  Iron  ore  is  mined  and  some  of  the  chief 
metallurgical  works  are  found  principally  in  South 
Russia  (the  territory  lying  to  the  south  of  Ukraina) 
and  in  the  Urals.  And  both  of  these  sections  of  the 
country  were  the  scene  of  almost  continuous  warfare 
all  through  the  civil  war,  changing  hands  on  several 
occasions.  And  most  of  the  time,  they  were  not  in  the 
hands  of  the  Soviet  Government. 

As  a  result  of  this,  we  find  the  following  picture  for 
the  condition  of  affairs  as  far  as  the  supplies  of  iron  and 
its  products  in  Central  Russia  are  concerned,  during 
1919.*  The  total  amount  of  metal  asked  for  during 
that  year  (mostly  iron,  with  small  amounts  of  other 
metals)  by  the  various  shops  and  foundries,  was 
120,000,000  pouds.  The  amount  of  iron  ordered  to 
be  delivered  in  response  to  these  requests  was  28,923,- 
000  pouds  during  the  first  half  of  the  year,  and 
8,725,000  pouds  during  the  second  half,  or  a  little  over 
37,000,000  pouds,  i.  e.,  30  per  cent,  of  the  amount 
requested.  But  the  actual  deliveries  were,  during  the 
first  half  of  the  year,  40  per  cent,  of  the  amount 
requested,  and  during  the  second  half  of  the  year,  70 
per  cent.     Thus,  the  actual  deliveries  of  metal  during 

•  Ekonomicheskaya  Zhisn,  February   18,  1920. 


FUEL  AND  RAW  MATERIALS  153 

the  year  constituted  about  17,600,000  pouds,  or  less 
than  fifteen  per  cent,  of  the  total  amount  asked  for. 

The  situation  with  regard  to  other  metals  is,  for  the 
time  being,  quite  satisfactory.  Most  of  the  copper  nor- 
mally used  in  Russia  is  of  home  extraction.  Zinc  and 
lead  were  imported  to  some  extent,  the  rest  being  also 
mined  at  home.  Aluminum  and  nickel  were  entirely 
of  foreign  origin.  But  of  all  these  metals  there  are 
still  rather  large  supplies  in  Soviet  Russia,  because 
during  the  last  years  of  the  world  war,  the  Allies  had 
shipped  into  Russia  large  amounts  of  these  metals, 
which  were  needed  for  the  war  industries.*  For  this 
reason,  the  "colored"  metal  industry  is  not  in  a  critical 
condition  as  far  as  the  supplies  of  raw  materials  are 
concerned.  If  in  spite  of  this,  most  of  the  factories 
working  these  metals  are  either  at  a  standstill  or  else 
produce  very  little,  that  is  due  to  other  causes. 

Textiles.  All  of  the  branches  of  the  textile  indus- 
try, with  the  exception  of  flax  spinning,  experience  an 
acute  shortage  of  raw  materials. 

The  cotton  used  in  Russia  is  partly  produced  in 
Russia  and  partly  imported.  The  importation  prac- 
tically ceased  during  the  war,  and  only  the  cotton  grown 
in  Turkestan  was  left.  During  the  revolution,  the 
general  disorganization  affected  cotton  growing  as  well. 
Much  of  the  area  formerly  sown  to  cotton  was  sown  to 
grain  and  other  foodstuff's.  The  cotton  area  contracted 
to  only  one-tenth  of  its  size  in  191 G.  The  most  acute 
stage  was  reached  in  1918,  when  in  all  the  cotton-grow- 
ing regions  of  Russia,  i.  e.,  in  Turkestan,  Bukhara  and 

*  Ekonomicheskaya  Zhisn,  June   24,   1920. 


154  ECONOMICS  OF  COMMUNISM 

Khiva,  only  about  100,000  desiatinas  were  sown  to 
cotton,  as  against  the  normal  area  of  over  1,000,000 
desiatinas.  In  1919  there  was  a  slight  improvement 
with  an  increase  of  19,000  desiatinas. 

But,  in  spite  of  this  improvement  in  the  cotton- 
sowing  situation,  the  shortage  at  the  cotton  mills  shows 
no  sig-ns  of  improvement;  on  the  contrary,  it  is  growing 
still  worse,  because  of  a  very  inefficient  system  of  the 
purchase  and  distribution  of  raw  cotton  by  the  "Glav- 
textil,"  i.  e.,  the  division  of  the  Supreme  Council  of 
National  Economy,  charged  with  the  administration 
of  the  textile  industry.  During  the  cotton  season  of 
1918-1919,  the  amount  of  raw  cotton,  purchased  in 
Turkestan,  was  5,529,996  pouds,  while  the  amount 
purchased  during  the  season  of  1919-1920  (September 
1  to  March  1)  was  only  2,061,178  pouds.  The  ques- 
tion of  transportation,  naturally,  plays  an  important 
part  in  the  distribution  of  cotton,  the  distance  between 
Central  Asia,  where  it  is  gTown,  and  Central  Russia, 
where  the  textile  mills  are  located,  being  very  great.* 

The  amount  of  wool  needed  in  1920  is  estimated  as 
follows:  509,739  pouds  of  natural  wool,  393,420  pouds 
of  artificial  wool,  and  219,075  pouds  of  waste.  The 
stocks  on  hand  on  January  1,  1920,  were  sufficient  to 
fill  the  requirements  of  natural  wool  for  nine  months, 
of  artificial  wool  for  three  and  one-half  months,  and  of 
waste  for  ten  months.  The  amount  expected  to  be 
gathered  during  the  year  was  486,582  pouds,  special 
premiums  being  offered  for  wool  gathering,  and  other 

•  The  figures  for  the  various  phases  of  the  textile  industry  are  taken 
from  numerous  reports  on  the  state  of  the  industry  in  the  Ekonomi- 
cheskaya  Zhisn,  particularly  from  a  summarized  report  in  the  special 
edition  of  June  24,  1920. 


FUEL  AND  RAW  MATERIALS  155 

measures  being  taken  to  stimulate  it.  Under  normal 
conditions,  Russia  imported  nearly  one-half  million 
pouds  of  wool. 

Flax  was  normally  grown  in  sufficiently  large  quan- 
tities to  supply  not  only  Russia's  own  needs,  but  to 
constitute  also  an  important  item  of  export  to  Great 
Britain,  France,  and  Belgium.  At  the  present  time, 
however,  the  flax  output  has  decreased  very  consider- 
ably and  continues  to  decrease.  President  of  the 
Supreme  Council  of  National  Economy  Rykov  reported 
to  the  Eighth  Congi-ess  of  Soviets  that  while  in  1919 
the  area  sown  to  flax  was  530,000  desiatinas  with  a 
crop  of  5,437,000  pouds,  in  1920  the  area  decreased 
to  less  than  300,000  desiatinas,  while  the  crop  was  not 
more  than  2,000,000  pouds.  This  means  that,  in  spite 
of  the  diminished  requirements  within  the  country,  due 
to  decrease  of  industrial  production,  Russia  now 
scarcely  produces  enough  flax  to  satisfy  her  own  pres- 
sing needs.  She  still  has  some  stocks  left  over  from 
preceding  years,  and  has  to  choose  between  exporting 
them  and  using  them  to  make  up  the  amount  she  needs 
for  her  own  industries  in  excess  of  the  current  crops. 

The  silk  situation  is  very  serious.  Normally,  Russia 
imported  fully  85  per  cent  of  the  silk  that  she  used, 
although  with  a  proper  degree  of  development,  she  can 
easily  supply  her  own  requirements.  The  last  impor- 
tation of  silk  was  in  1917,  and  since  then  the  silk  indus- 
try has  been  living  almost  exclusively  on  the  remaining 
stocks.  But  these  supplies  are  rapidly  being  exhausted, 
so  that  to-day  practically  no  pure  silk  tissue  is  being 
spun,  the  remaining  quantities  of  silk  being  mixed  with 
cotton  and  with  other  fibrous  materials.    It  is  hoped  that 


156  ECONOMICS  OF  COMMUNISM 

this  condition  of  affairs  may  be  alleviated  by  the 
stimulation  of  the  silk  industry  in  the  Caucasus  and 
in  Turkestan,  where  conditions  are  favorable  for  it. 

Other  Industries.  With  the  other  industries,  the 
situation  is  practically  the  same  as  with  the  two  prin- 
cipal ones  that  we  have  discussed. 

The  amount  of  rubber  on  hand  at  the  beginning  of 
the  year  1920  was  140,000  pouds.  Although  of  the 
seven  rubber-goods  factories  that  are  found  on  the  terri- 
tory of  Soviet  Russia,  four  are  in  operation,  their  pro- 
duction is  so  small,  owing  very  largely  to  fuel  difficul- 
ties, that  this  amount  of  rubber,  at  the  present  rate  of 
work,  is  sufficient  to  last  for  three  years.  Under  nor- 
mal conditions  of  work,  with  all  seven  of  the  factories 
m  operation,  this  amount  would  have  been  sufficient 
to  last  for  but  two  months.*  The  supply  of  rubber, 
of  course,  is  entirely  a  matter  of  import. 

The  situation  in  the  chemical  industries  is  similar, 
for  they,  too,  depend  almost  exclusively  upon  importa- 
tion for  the  raw  materials  which  they  use. 

The  leather  industry  suffers  very  considerably 
because  of  lack  of  both  raw  hides  and  tanning  extracts. 
Mormally  Eussia  exported  nearly  43,000  tons  of  hides, 
hut  at  the  same  time  she  imported  (mostly  from  Mon- 
golia) an  even  larger  amount  of  raw  hides,  besides 
bringing  in  (in  1914)  8,000  tons  of  leather  goods. 
The  killing  off  of  the  live  stock  during  the  war  and 
the  Revolution  has  considerably  affected  the  leather 
industry,  and  to-day,  in  spite  of  restricted  leather  pro- 
duction, there  is  an  acute  shortage  of  raw  hides. 

The  industries  working  over  foodstuffs  (tea-packing, 

•  Ekonomicheskaya   Zhisn,  June   24,    1920. 


FUEL  AND  EAW  MATEEIALS  157 

coffee,  tobacco),  depending  almost  exclusively  upon 
importation  for  their  raw  materials,  are  naturally  in  a 
critical  position,  so  far  as  this  phase  of  their  work  is 
concerned.  The  sugar-refining  industry  draws  upon 
the  sugar-beet  of  Ukraina  for  its  supply  of  raw  mate- 
rials, but  it  is  also  in  a  critical  position  because  the 
civil  war,  of  which  Ukraina  is  always  one  of  the  prin- 
cipal scenes,  has  played  havoc  with  every  phase  of 
economic  life  there. 


CHAPTER  III 

LABOR 

According  to  the  economic  theory  of  Conmmnism,  as 
we  have  already  had  occasion  to  see,  labor  plays  the 
most  important  part  in  the  determination  of  the  pro- 
ductive forces  of  a  country.  And  there  is  no  doubt 
that  labor  is  by  far  the  most  outstanding  element  in 
the  economic  situation  in  Russia  under  the  Soviet 
regime.  We  shall  consider  the  question  of  labor  in  this 
chapter  as  the  first  and  the  most  fundamental  of  the 
human  elements  in  the  situation  which  the  Soviet  eco- 
nomic regime  has  to  face. 

The  labor  question  in  Soviet  Russia  is  characterized 
by  four  important  features :  first,  the  shortage  of  labor ; 
second,  the  loss  of  labor  discipline;  third,  the  falling-off 
of  productivity  and  the  consequent  contraction  of  pro- 
duction; and  fourth,  the  measures  taken  or  contem- 
plated by  the  Soviet  Government  for  the  overcoming 
of  these  three  difficulties. 

1.    Labor  Shortage 

In  his  report  on  the  militarization  of  labor,  pre- 
sented to  the  Ninth  Congress  of  the  Russian  Communist 
Party,  Trotsky  stated  that  at  the  beginning  of  1920 
there  were  in  all  the  important  branches  of  industry  in 

158 


LABOE  159 

Soviet  Eiissia  not  much  over  one  million  workmen  on 
the  list  of  the  employees.  The  actual  number  at  work, 
hovs^ever,  v^as  only  about  eight  hundred  thousand.  The 
rest  were  gone.*  If  we  recall  that  only  two  years 
before  this,  in  January,  1918,  when  the  First  All- 
Russian  Congress  of  Trade  and  Professional  Unions 
had  its  sessions,  the  number  of  men  in  nineteen  prin- 
cipal industries  represented  at  the  Congress  was 
2,532,000,  we  can  understand  more  clearly  the  sig- 
nificance of  Trotsky's  figTires  from  the  point  of  view 
of  labor  shortage.  And  it  must  be  remembered,  too, 
that  Trotsky's  figures  refer  to  all  the  men  employed, 
while  the  fig-ure  for  the  representation  at  the  Congress 
of  the  Unions  covers  only  organized  labor,  the  total 
number  being  obviously  much  greater. 

At  the  first  meeting  of  the  Committee  on  Universal 
Compulsory  Labor,  held  under  the  presidency  of 
Dzerzhinsky  in  February,  1920,  the  labor  requirements 
for  the  enterprises  controlled  by  the  Commissariats  of 
Agriculture  and  Ways  of  Communication  and  by  the 
Supreme  Council  of  National  Economy  for  the  year 
of  1920  were  authoritatively  estimated  at  230,000 
skilled  laborers  and  over  two  million  of  unskilled  labor, 
in  addition  to  the  number  already  employed. f  The 
total  shortage  for  the  year,  covering  the  rest  of  the 
economic  life  of  the  country,  was,  of  course,  much 
larger. 

From  September  4,  1919,  to  February  1,  1920, 
thirty-eight  factories  and  foundries,  working  for 
national  defense,  made  a  demand  for  39,145  workmen, 

•  Moscow  Izvestiya,  March   21,   1920. 
t  Ekonomicheskaya  Zhisn,  February   26,    1920. 


160  ECONOMICS  OF  COMMUNIS¥i 

mostly  skilled  labor.  They  were  supplied  with  10,158 
workmen,  or  27  per  cent,  of  the  number  requested.  Of 
these  men,  2,200  had  to  be  recalled  from  the  army  and 
most  of  the  rest  brought  over  from  other  branches  of 
industry.* 

An  investigation,  conducted  in  Moscow  in  the  spring 
of  1920,  covering  a  large  number  of  important  enter- 
prises, showed  a  shortage  of  nearly  50  per  cent,  of  the 
number  already  employed  in  some  of  the  important 
branches  of  industry.  In  metal  works,  tlie  require- 
ment was  49.7  per  cent. ;  in  wood  work,  42.1  per  cent. ; 
in  chemical  works,  21.6  per  cent.;  in  electrotechnic 
work,  89.6  per  cent. ;  in  municipal  transportation,  42.7 
per  cent.f  This  means  that,  taking  into  consideration 
the  amounts  of  fuel  and  raw  materials  available,  work 
could  be  found  for  fifty  per  cent,  more  men  than  already 
employed,  and  production  increased  proportionately, 
Petrograd,  which  was  formerly  the  largest  industrial 
center  in  Russia,  had,  at  the  time  of  the  last  municipal 
elections,  held  in  July,  1920,  253,340  workers,  "men 
and  women,  employed  in  the  factories,  foundries,  res- 
taurants, hospitals,  etc."  :}: 

In  the  Bogoslovsk  mining  district  in  the  Urals,  the 
number  of  workmen  before  the  war  was  38,000.  The 
number  of  workmen  in  1920  was  11,000,  of  whom  a 
large  percentage  were  children.  § 

The  seven  largest  metallurgical  foundries,  consti- 
tuting the  "shock"  group  of  the  industry  and  working 
exclusively  for  railroad  repair,  asked  during  the  see- 

"*  Ekonomicheskaya  Zhisn,  February  20,   1920. 
t  Ibid.,   May   18,   1920. 

t  G.  Zinoviev,  in  Moscow  Pravda,  July  6,  1920. 
§  Moscow  Izvestiya,  January  2G,  1921. 


LABOR  161 

end  half  of  1920  for  14,571  men.  They  received  13,383 
men,  of  whom,  however,  8,442  were  withdrawn  or 
simply  disappeared.  Thus,  the  total  increase  of  their 
working  force  was  4,941,  instead  of  the  14,571  that 
they  asked  for.* 

The  progressive  diminution  of  the  number  of  work- 
men is  illustrated  by  the  following  figures,  showing 
the  membership  of  the  Serpukhovo  Division  of  the  All- 
Russian  Union  of  Textile  Workers:  in  January,  1919, 
the  number  of  men,  women,  and  children  registered  at 
the  Division  as  working  in  the  industry  was  25,456. 
In  July,  1919,  the  number  was  already  13,682.  In 
December,  1919,  the  number  was  12, 345. f  The  tex- 
tile industry  at  the  present  time  complains  perhaps 
more  than  any  other  about  labor  shortage. 

These  instances  of  labor  shortage  could  be  multiplied 
to  infinity.  They  would  show  the  same  condition.  The 
facts  we  have  brought  together  here  present  a  sufficiently 
clear  picture  of  labor  shortage  in  Russia.  What  is 
important  is  to  examine  the  causes  of  this  disappear- 
ance of  the  Russian  proletariat,  in  whose  name  the 
experiment  in  the  economics  of  Communism  is  being 
carried   on. 

Trotsky,  in  the  report  of  which  we  spoke  above, 
states  that  the  workmen  who  have  disappeared  have 
gone  to  the  villages  or  into  "spekulyatsia,"  i.  e.,  have 
either  gone  back  to  agricultural  pursuits  whence  most 
of  them  came  originally,  or  else  have  gone  into  that 
most  lucrative  of  all  present-day  occupations,  clandes- 
tine profiteering  trade.  Trotsky,  however,  does  not  state 

•  Moscow  Izvestiya,  January  29,  1921. 

t  Ekonomicheskaya   Zhisn,  April   20,    1920. 


162  ECONOMICS  OF  COMMUNISM 

the  reasons  for  this  flight  of  workmen  from  industrial 
centers.  We  can  find  these  reasons  in  a  statement  which 
comes  from  just  as  authoritative  a  source,  viz.,  the  last 
Conference  of  Provincial  Committees  of  the  Depart- 
ment for  the  Registration  and  Distribution  of  Labor. 
In  the  theses,  adopted  by  the  Conference,  on  the  methods 
of  "extracting"  workmen  from  the  villages,  it  is  stated 
that  the  agrarian  reform,  the  mobilization  for  the  army, 
and  the  food  crisis  were  the  causes  which  drove  the 
industrial  proletariat  away  from  the  factories  and  the 
industrial  centers.  The  greatest  stress  is  laid  on  the 
food  crisis,  which  accounts  for  the  fact  that  most  of  the 
former  industrial  proletariat  has  fled  to  the  rural 
districts.* 

It  is  a  matter  of  common  knowledge,  never  denied 
by  the  Soviet  leaders  themselves  and  more  often  even 
played  up  by  them  for  purposes  of  propaganda,  that  the 
food  crisis  in  the  Russian  cities  is  and  has  been  very 
acute  all  along.  Its  causes  are  many  and  varied,  and 
some  of  these  causes  will  be  discussed  in  their  proper 
place  in  this  study.  The  question  that  is  of  special 
interest  to  us  in  this  connection  is  in  what  particular 
way  the  food  crisis  affects  the  labor  situation  from  the 
point  of  view  of  the  flight  of  workmen  from  the  indus- 
trial centers. 

The  system  of  wages  in  Soviet  Russia  for  men  em- 
ployed by  the  Government  in  the  nationalized  enter- 
prises is  two-fold:  part  of  the  remuneration  of  labor  is 
given  in  the  form  of  food  cards,  which  entitle  the  holder 
to  obtain  certain  amounts  of  food  at  the  "fixed"  prices, 
i.  e.,  at  a  price  which  is  very  low  in  comparison  with 

*  Ekonomicheskaya  Zhisn,  January    11,    1920. 


LABOR  163 

the  current  "speculative"  price;  tlie  rest  of  the  remu- 
neration is  in  currency.  The  food  ration,  supplied  by 
the  Government  in  exchange  for  the  card,  is  not  nearly 
sufficient,  particularly  in  the  larger  centers,  to  cover  the 
food  requirements  of  a  workman.  The  rest  of  his  sus- 
tenance he  must  purchase  wherever  he  can,  and  the  only 
available  source  of  supply  is  the  "spekulyatsia"  mar- 
ket, where  prices  are  fixed  by  the  seller  in  accordance 
with  the  danger  he  had  to  undergo  in  bringing  his 
wares  to  the  market  and  more  often  in  accordance  with 
his  own  desire. 

Under  these  circumstances,  the  question  of  the  rela- 
tion between  the  wages  of  labor  and  the  ''speculative" 
prices  for  foodstuffs  becomes  one  of  tremendous  impor- 
tance. In  fact,  it  is  this  relation  that  really  constitutes 
the  determining  factor  in  the  condition  of  the  labor 
market  and  labor  supply  of  the  principal  cities  and 
industrial  centers. 

Let  us  consider  the  situation  in  this  regard  on  the 
basis  of  the  figures  available.* 

2.    Wages  and  Prices 

The  increase  of  prices  of  the  necessities  of  life  began 
soon  after  the  Revolution  and  continued  at  an  ever- 
quickening  pace  under  the  Soviet  regime.  S,  Strumilin 
calculates  that  during  the  second  half  of  1917,  the 
market  prices  of  foodstuffs  went  up  to  seven  times  their 
former  amount,  while  the  wages  only  doubled.     After 

♦  These  figures  are  taken  principally  from  several  studies  of  the  ques- 
tion, trade  by  S.  Strumilin,  a  noted  Soviet  economist.  See  Petrograd 
Izvestiya,  December  25,  1919,  Ekonomicheskaya  Zhis7i,  January  15, 
1920,   etc. 


164  ECONOMICS  OF  COMMUNISM 

January  1,  1918,  the  growth  of  market  prices  began  to 
slow  down  somewhat,  and  four  attempts  were  made 
to  readjust  the  wages  of  hihor.  From  May,  1918,  to 
September,  1919,  the  wages  generally  increased  seven 
times,  while  the  market  prices  of  foodstuffs  went  up 
fourteen  times. 

Now,  what  part  of  his  daily  diet  does  a  workman 
have  to  purchase  out  of  his  wages?  Rather  detailed 
fig-ures  on  this  question  are  available  for  the  period 
August-November,  1919. 

Normal  food  consumption  for  a  workman  doing  ordi- 
nary work  is  calculated  to  be  about  100,000  calories 
a  month.  The  amount  taken  to  be  absolutely  essential, 
i.  e.,  the  minimum,  even  for  the  present  time,  is  80,000 
calories.  The  number  of  calories  furnished  by  the 
Government  during  the  four-month  period  under  con- 
sideration is  shown  in  the  following  table : 

Table  No.  1 
Card  Rations,  August-November,  1919 

Number  of  Average  per  mo. 

Region  Gov'ts  Cities     Villages     (in  thous. 

calories) 

Northern  7  24  47  13.9 

Central  Industrial    8  48  89  14.6 

Agricultural  ...7  34  58  16.6 

Western 3  14  27  19.0 

Volga  Basin 5  22  46  23.7 

Urals    5  22  40  25.6 

Western  Siberia    2  2  3  46.7 

Total 37  166  310 


LABOR  165 

This  table  shows  two  important  things.  In  the  first 
place,  the  Government  was  able  to  provide  on  the  average 
only  18,400  calories  per  workman  per  month,  when  the 
normal  requirement  is  100,000  and  the  essential  mini- 
mnm  no  less  than  80,000.  In  tlie  second  place,  the 
Government  obviously  followed  the  line  of  least  resist- 
ance from  the  point  of  view  of  difficulties  encountered 
in  the  matter  of  food  supply.  The  monthly  ration 
varied  from  1:^,900  calories  a  month  in  the  isTorthern 
region  to  46,700  in  Western  Siberia.  If  these  seven 
regions  are  classified  according  to  their  degree  of  pro- 
viding food  locally,  we  shall  find  that  the  following 
conditions  obtain: 

Table  No.  2 

Average  Monthly  Ration 
(in  tlious.  calories) 

Least  provided  region  14.3 

Medium      "  "         17  7 

Well  «  "         ]l25!3 

In  other  words,  even  in  those  sections  of  the  country^ 
in  which  agricultural  production  is  sufficiently  large 
to  provide  the  needs  of  the  local  population,  the  Govern- 
ment, in  spite  of  the  continued  existence  of  the  state 
grain  monopoly,  is  able  to  provide  only  a  quarter,  at 
best,  of  the  food  requirements  in  the  larger  centers  of 
population. 

When  we  come  to  consider  the  total  amount  of  food 
that  a  workman  can  obtain,  there  are  three  factors  that 
we  have  to  take  into  account,  viz.,  tlie  ration  supplied 
by  means  of  the  card  system ;  the  rate  of  wages  received ; 


166  ECONOMICS  OF  COMMUNISM 

and  the  prices  of  food  products  on  the  "open,"  or 
"spekulyatsia"  market.  Taking  these  three  factors  into 
account,  S.  Strumilin  gets  the  following  table  for  the 
average  amount  of  food  that  a  workman  can  get  daily 
in  various  cities: 

Table  No.  3 

Average  Nuniher  of  Calories  that  Can  Be  Obtained  Daily  by 

a  Workman  on  the  Basis  of  Government  Allowance,  Rate  of 

Wages,  and  Prices  on  the  "Open"  Market 

No.  of  calories     %  of  the  normal 

Petrograd    1,768  53 

Moscow    2,602  78 

Tambov   3,075  92 

Smolensk 3,104  93 

Kazan    3,328  100 

Penza  3,487  105 

Simbirsk 4,227  127 

Village,  Gov't  Simbirsk 4,288  129 

"       Tambov,  etc.   .  .  .4,520  135 

Thus  a  workman  in  Petrograd,  after  using  up  the 
whole  Government  allowance  of  food  and  spending  all 
his  wages  on  food  alone,  can  still  get  only  about  half 
of  the  amount  of  food  he  normally  needs ;  while  a  work- 
man in  Simbirsk,  similarly  situated,  can  get  27  per 
cent,  more  than  his  normal  requirement.  The  reason 
for  the  discrepancy  obviously  lies  in  both  wages  and 
prices. 

One  thousand  calories  of  food  cost  in  Petrogi-ad  15 
roubles  and  80  copecks;  in  a  village  in  Simbirsk,  they 
cost  only  60  copecks.  There  is  a  difference  here  of 
2,540  per  cent.     At  the  same  time,  the  wages  in  Petro- 


LABOR  167 

grad  are  only  two  and  on&-half  times  higher  than  they 
are  in  Simbirsk. 

For  purposes  of  wage  distribution  the  whole  of  Soviet 
Russia  is  divided  into  territories,  or  "belts"  (although 
that  term  has  no  geographical  significance)  of  equal 
wages.  The  wages  are  not  the  same  throughout  the 
country.  For  example,  if  the  wages  set  for  Moscow  in 
September,  1919,  are  taken  as  100,  then  the  wages  set 
for  Petrograd  during  the  same  period  would  be  150, 
while  those  for  Simbirsk,  60. 

Readjustments  of  wages  through  a  redistribution  of 
wage  "belts"  is  made  officially  once  a  year,  though  up  to 
now  they  have  taken  place  oftener.  On  the  other  hand, 
"free"  prices  on  the  "open"  market  fluctuate  constantly 
and  at  will.  For  example,  the  prices  in  Moscow  on 
E^ovember  1,  1919,  were  32  per  cent,  higher  than  in  the 
provinces,  while  by  the  end  of  December,  they  were 
already  82  per  cent,  higher.  Taking  Moscow's  "free" 
prices  as  100,  we  find  that  the  average  for  the  rest  of 
the  country  in  October,  1919,  was  49;  in  IS^ovember, 
37 ;  and  in  December,  27.  In  some  parts  of  the  coun- 
try the  average  prices  were  as  low  as  11. 

In  view  of  these  constant  fluctuations  and  discrepan- 
cies, the  following  comparison,  although  perfectly  fan- 
tastic on  the  face  of  it,  is,  nevertheless,  more  than  pos- 
sible: In  1914,  a  daily  food  ration  in  Moscow,  con- 
sisting of  2,700  calories,  cost  fourteen  copecks.  On 
January  1,  1920,  taking  the  prices  prevailing  at  the 
Sukharyovka  (the  largest  of  the  "spekulyatsia"  mar- 
kets), the  same  amount  of  food  cost  798  roubles  and 
50  copecks.     At  the  same  time,  in  Western  Siberia, 


168  ECONOMICS  OF  COMMUNISM 

where  wages  are  half  of  what  they  are  in  Moscow^  the 
same  amount  of  food  cost  95  roubles  and  70  copecks. 

Under  these  circumstances,  it  is  easy  enough  to  see 
why  a  workman  in  PetrogTad,  who  for  all  his  wages  can 
scarcely  half  feed  himself  (and  then,  if  he  succeeds  in 
obtaining  food  at  the  ''open"  market)  flees  to  a  village 
somewhere  in  the  Government  of  Simbirsk  or  Tambov, 
where  he  can,  for  his  wages,  not  only  provide  for  him- 
self a  normal  amount  of  food,  but  even  have  a  consider- 
able part  of  his  wages  left  over.  Moreover,  there  are 
opportunities  in  the  villages  for  work  along  agricultural 
lines,  with  occasionally  enticing  possibilities  under  the 
agrarian  scheme. 

It  is  easy  enough  to  account  for  shortage  of  labor  on 
this  score  alone.  And  it  is  clear  that  the  effect  of  food 
conditions  on  the  labor  situation  is  very  direct  and 
very  disastrous.  Not  only  does  it  cause  labor  shortage, 
but  it  impairs  labor  discipline  among  those  who  still 
remain  at  work. 

3.    Labor  Discipline 

The  laxity  of  labor  discipline  as  an  almost  universal 
phenomenon  in  Soviet  Russia  is  also  commonly  admit- 
ted by  the  Soviet  Government.  Its  extent  is  very 
great,  and  the  forms  it  assumes  are  the  same  as  those 
f  uund  in  all  other  countries,  except  that  in  Russia  under 
the  Soviet  regime  these  forms  have  assumed  an  unpre- 
cedented character  of  development.  There  are  three 
main  forms,  viz.,  lateness  in  coming  to  work ;  absences 
from  work ;  and  strikes. 

No  figures   are   available  to   show   statistically   the 


LABOR  169 

extent  of  lateness,  as  there  are  fi^ires  available  to  show 
very  strikingly  the  laxity  of  labor  discipline  in  the 
matter  of  absences.  But  it  appears  that  even  in  the 
attending  of  meetings  and  conferences,  the  representa- 
tives of  labor  are  never  on  time.  One  of  the  recent 
decrees  of  the  Soviet  Government  in  the  cycle  of  the 
measures  taken  for  overcoming  this  laxity  in  labor 
discipline  is  devoted  to  the  question  of  lateness.  The 
penalties  provided  in  this  decree,  as  we  shall  see  below, 
indicate  plainly  the   seriousness  of  the  problem. 

Some  time  ago,  an  article  appeared  in  an  official 
Moscow  newspaper,*  which  was  entitled,  "How  Much 
Do  We  Work  ?"  The  article  had  a  subtitle,  which  read, 
"Bitter  Figures!"  This  article  was  devoted  to  the 
work  of  the  principal  railway  shops  of  all  the  railways 
in  Soviet  Eussia  from  the  point  of  view  of  the  actual 
number  of  hours  of  work  done  in  them.  The  following 
table  gives  these  "bitter"  figures : 

Table  No.  4 

Worh  of  the  Principal  R.B.  Shops 

Year         Nominal  Number  of  Working  Actual  No. 

Days         Hours           Hours  Hours  Per 

per  year       per  day         per  year  per  year  cent. 

1914    284              10                2,840  2,369  83.5 

1918    300                8                2,400  1,750  73.0 

1919    300                8                2,400  1,370  57.0 

The  nominal  number  of  working  days  in  1918  and 
1919  increased  in  comparison  with  1914  because  the 
number  of  holidays  (which  were  very  numerous  under 

AprU  30,  1920. 


170  ECONOMICS  OF  COMMUNISM 

the  Imperial  regime)  was  very  much  reduced  after  the 
Eevolution.  The  official  working  day  was  set  at  eight 
hours,  instead  of  ten  as  before.  And  the  actual  num- 
ber of  working  hours,  cut  to  57  per  cent,  in  1919  as 
compared  with  1914,  is  calculated  after  the  deduction 
of  the  time  wasted  for  lateness  and  absence. 

Taking  the  working  day  as  officially  eight  hours,  the 
number  of  full  days  that  an  average  workman  in  the 
railway  shops  gave  for  his  pay  was,  in  1919,  one  hun- 
dred and  seventy-one,  or  less  than  half  of  the  total 
number  of  days  in  the  year. 

What  was  the  situation  in  1920  ?  It  must  be  remem- 
bered that  we  are  dealing  here  with  an  industry  which 
is  absolutely  essential  to  the  life  of  the  country,  upon 
which  depends  the  work  of  the  whole  economic  appara- 
tus of  Soviet  Russia.  Moreover,  we  must  not  forget 
that,  as  we  had  noted  in  speaking  of  the  question  of 
transportation  generally,  starting  with  December,  1919, 
and  January,  1920,  special  efforts  were  made  to  turn 
the  whole  attention  of  the  country  to  the  problem  of 
transportation,  particularly  that  phase  of  it  which  is 
concerned  with  railroad  repair.  How  did  the  railroad 
workmen  react  to  these  attempts  from  the  point  of  view 
of  labor  discipline  ? 

Statistics  showing  the  extent  of  absence  from  work 
are  available  for  the  month  of  March,  1920,  for  several 
important  sections  of  the  railroad  system.  They  show 
a  situation  that  is  by  no  means  uniform,  and  as  a  whole^ 
by  no  means  favorable.* 

The  normal  percentage  of  absences  from  work  before 

•  These  figures  are  taken  from  an  article  by  P.  Senushkin,  published 
in   Moscow  Pravda,  June  4,   1920. 


LABOE  171 

the  revolution,  including  cases  of  illness,  was,  on  the 
average,  about  fifteen.  In  some  enterprises  it  never 
exceeded  ten.  The  figiires  for  March,  1920,  show  that 
in  some  of  the  enterprises  on  the  Soviet  railways, 
approximately  the  same  percentage  of  absences  has  been 
maintained.  But  these  are  comparatively  few  in  num- 
ber. In  others,  the  percentage  of  absences  has  reached 
new,  unprecedented  and  almost  incredible  figures.  For 
example,  at  the  Vitebsk  depot  of  the  Riga-Oryol  Rail- 
road, the  number  of  absentees  for  the  month  constituted 
73.6  per  cent,  of  the  total  number  of  workmen;  in  the 
Savelovsk  shops  of  the  Northern  Railroad,  the  percent- 
age of  absences  was  81.8.  In  other  words,  at  the 
Vitebsk  depot  only  about  twenty-six  men  out  of  every 
hundred  employed  were  at  work  regailarly  during  the 
month,  while  at  the  Savelovsk  shops,  only  eighteen  out 
of  every  hundred  appeared  at  the  shops.* 

*  The  Petrograd  Krasnaya  Gazeta  of  September  10,  1920,  reports  the 
following  results  ot  a  casual  inspection  made  at  several  factories  in- 
Petrograd  : 

"At  the  Nobel  factory  the  list  of  workmen  indicated  457  workmen 
and  116  employees.  The  inspectors  found  that  107  workmen  and  14 
employees  were  absent  on  leave ;  37  workmen  and  17  employees  were 
ill  ;  19  workmen  and  1  employee  were  absent  on  special  missions. 
Thirty-one  workmen  and  1  employee  were  absent  for  no  reason. 
Thus,  according  to  the  records  at  the  office  of  the  factory,  only  263 
workmen  and  83  employees,  i.e.,  less  than  half  of  the  list  were  present. 

"But  the  inspectors  did  not  stop  there.  It  is  not  enough  that  a 
workman  is  indicated  as  having  reported  for  work ;  it  is  necessary  to 
see  whether  or  not  he  is  actually  at  his  place.  The  following  was  the 
situation  at  the  shops:  In  the  mechanical  shop,  in  which  43  were 
reported  as  present,  only  24  were  actually  at  work.  In  the  forge 
room,  only  five  out  of  14  were  at  work.  In  the  moulding  room,  th  re 
were  16,  instead  of  69.  .  .  .  The  repair  shop  beat  the  record  :  instead 
of  the  41  workmen  indicated  as  having  reported  in  the  morning,  two  men 
were  wandering  about  the  shop  in  a  weary  fashion.  The  transmission 
belts  were  running,  but  no  work  was  being  done,  because  there  were 
no  gears  in  the  lathes.  It  was  only  in  the  assembling  room  that  all 
the  five  workmen  who  had  reported  in  the  morning  were  actually  at 
work. 

"At  the  Old  Lessier  mill  it  was  impossible  to  make  an  inspection  of 


172  ECONOMICS  OF  COMMUNISM 

Most  of  the  absences  were  alleged  to  be  due  to  ill- 
ness. Normally,  about  half  of  the  total  number  of 
absences  was  due  to  cases  of  illness.  Now,  from  two- 
thirds  to  nine^■tenths  of  the  total  number  of  absences 
are  explained  by  the  absentees  as  cases  of  illness 
Judging,  however,  by  the  severity  of  the  decree  concern- 
ing absences  on  account  of  illness,  the  Soviet  Govern- 
ment is  more  than  certain  that  most  of  the  cases  of 
absence  explained  as  illness  are  simply  due  to  laxity 
of  labor  discipline  and  lack  of  desire  on  the  part  of  the 
men  to  appear  for  work. 

The  Sormovo  foundry,  which  is  the  largest  metal- 
lurgical works  in  Russia,  had,  in  1917,  20,346  work- 
men. This  number  was  reduced  to  nine  and  one-half 
thousand  by  the  beginning  of  1920,  and  rapidly  con- 
tinued to  decrease  still  farther,  for  the  workmen  fled 
from  tiie  foundry  whenever  they  could  and  wherever 
they  could.  The  average  percentage  of  absences  during 
1919  was  thirty,  as  against  the  normal  percentage  of 
ten.  On  October  1,  however,  the  management  increased 
the  food  ration  and  began  to  apply  disciplinary  punish- 
ments. As  a  result  of  this,  the  percentage  of  absences 
decreased  from  thirty-two  in  August  to  twenty  in 
December.* 

Similar  conditions  of  labor  discipline  exist  all 
through  the  whole  industrial  life.  The  enterprises 
working  for  transportation  and  the  metallurgical  works, 

the  factory,  because  the  workmen  were  in  a  meeting  during  work  hours 
to  discuss  the  question   of  overtime  pay. 

"The  same  discouraging  picture  was  found  at  other  factories.  At  the 
Petrograd  Car  Foundry,  the  machinery  was  turning  for  four  workmen. 
Labor  discipline  has  fallen  off  everywhere,  and  as  a  result,  the  pro- 
ductivity of  labor  has  decreased  to  an  extraordinarily  low  level." 

•  Ekonomicheskaya  Zhisn,  March   7,    1920. 


LABOK  173 

being  essential  industries,  receive  special  attention  and 
better  conditions  of  labor  discipline  are  expected  of 
them.     The  other  industries  show  still  greater  laxity. 

The  third  form  of  laxity  in  labor  discipline,  the 
strike,  is  not  discussed  very  extensively  in  the  Soviet 
press.  Strikes  are  forbidden  on  the  theory  that  since 
all  workmen  are  the  employees  of  the  state  and  since  the 
state  is  the  expression  of  the  dictatorship  of  the  prole- 
tariat, in  striking  the  workmen  really  strike  against 
themselves  and  merely  impair  their  own  interests. 
Strikes,  however,  do  occur,  and  those  who  take  part  in 
them  are  punished  with  a  greater  or  lesser  degree  of 
severity. 

On  January  2,  1920,  for  example,  a  typical  strike 
took  place  at  the  shops  of  the  Kursk  Railroad.* 
During  working  hours,  most  of  those  among  the 
employees  of  the  shops  who  were  not  Communists  (and 
they  were  the  majority)  were  asked  to  come  to  a  mass 
meeting,  held  at  the  workshop  of  the  painting  division. 
When  most  of  them  came  together,  a  representative  of 
the  Railroad  Workers'  Professional  Union,  who  also 
came  to  the  meeting,  asked  them  to  state  their  demands 
and  their  reasons  for  leaving  work  without  permission. 
In  reply,  the  workmen  demanded  the  rescinding  of  a 
recent  order  for  the  confiscation  of  matches  and  other 
products  brought  to  the  shops  by  some  organization. 
When  the  representative  of  the  Union  said  to  them  that 
such  a  demand  should  have  been  forwarded  to  the 
proper  authorities,  no  attention  at  all  was  paid  to  his 
words.      Then  he  again  pointed  out  to  the  men  that 

*  Thia  description  of  the  strike  is  takea  from  Petrograd  Izvestiya, 
January  5,   1920. 


174  ECONOMICS  OF  COMMUNISM 

they  were  violating  labor  discipline  by  leaving  work 
without  permission,  and  that  this  may  cause  repressive 
measures  to  be  taken  aganist  them.  In  reply  to  this, 
the  Union  official  was  hooted  down,  and  the  whole  meet- 
ing broke  into  an  uproar,  above  which  words  like 
"Shame,"  "Out,"  could  be  heard. 

The  upshot  of  the  whole  matter  was  that  the  striking 
workmen  found  themselves  locked  out.  The  Execu- 
tive Bureau  of  the  Central  Committee  of  the  Railroad 
Workers'  Professional  Union  sanctioned  the  decision 
of  the  management  to  shut  down  the  shops  and  to  organ- 
ize a  commission,  "consisting  of  representatives  of  the 
Regional  Committee  of  the  Union  in  the  Wage  Com- 
mission of  the  People's  Commissariat  of  Ways  of  Com- 
munication, which  should  be  charged  with  the  duty  of 
finding  other  workmen,  who  would  obey  the  discipline 
of  the  Union  and  understand  better  their  duty  toward 
the  Union,  as  well  as  be  more  loyal  to  the  Soviet 
authority." 

In  making  this  decision,  it  was  explained  that  the 
labor  discipline  among  the  workmen  of  the  Kursk 
shops  had  become  very  lax.  Although  amply  supplied 
with  food,  scarcely  600  of  the  total  of  1,G00  worked 
regularly,  while  the  productivity  of  those  at  work  had 
fallen  off  to  a  minimum. 

Nor  was  this  all.  A  number  of  the  strikers  were 
tried  and  sentenced  to  imprisonment  for  various  terms. 
Later  on,  forty-four  of  those  imprisoned  petitioned  the 
Government  for  release,  promising  in  their  petition 
to  try  "to  raise  the  productivity  of  labor,  cease  from 
practicing   sabotage    and    froni    carrying   on    agitation 


LABOR  175 

against  the  Soviet  Government."  Those  who  signed 
this  petition  were  released.* 

This  incident  sheds  an  interesting  light  on  the  role 
which  trade  unions  play  in  Soviet  Russia  as  labor 
organizations.  According  to  M.  Tomsky,  the  President 
of  the  Central  Executive  Committee  of  the  All-Russian 
Association  of  Trade  Unions,  the  trade  or  professional 
unions  are  formally  non-party  organizations  of  work- 
men, whose  object  is  to  unite  all  workmen  irrespective 
of  their  political  s}anpathies  and  affiliations.  But  at 
the  same  time,  they  admit  into  their  ranks  only  those 
workmen  who  "believe  in  the  introduction  of  Commu- 
nism through  the  dictatorship  of  the  proletariat  and 
follow  in  all  their  actions  the  hegemon  of  the  prole- 
tarian  revolution,   the  Russian   Communist   Party."  f 

The  trade  or  professional  unions  are  thus  under  a 
complete  control  of  the  Communist  Party,  which  is  to 
be  expected  under  the  unified  economic  plan.  But  they 
are .  also  unofficially  quasi-governmental  institutions, 
charged  with  the  task  not  only  of  inculcating  in  the 
workmen  a  Communistic  psychology,  but  also  with  cer- 
tain definite  duties  of  semi-administrative  character. 
And  in  this  respect,  they  are  expected  particularly  to 
assist  in  the  establishment  of  labor  discipline,  increas- 
ing the  intensity  and  the  productivity  of  labor,  and 
otherwise  facilitating  a  ''rational  utilization  of  the 
technical  equipment  and  manpower."  As  we  saw  in 
the  case  of  the  strike  on  the  Kursk  railway,  the  per- 

•  This  incident  was  reported  in  the  Petrograd  Krasnaya  Gazeta, 
April  IS,  1920,  under  the  title,  "They  Have  Repented." 

t  Theses  presented  to  the  Third  All-Russian  Congress  of  Trade  or  Pro- 
fessional Unions,  published,  substantially  as  adopted  by  the  Congress, 
in    Ekonomicheskaya    Zhisn,    March    10,    1920. 


176  ECONOMICS  OF  COMMUNISM 

formance  of  these  duties  on  the  part  of  the  trade  or 
professional  unions  sometimes  calls  for  repressive 
measures,  that  do  not  fall  short  even  of  locking  out 
the  striking  workmen  and  sanctioning  their  imprison- 
ment. 

Jf.    Production  and  the  Productivity  of  Labor 

The  shortage  of  labor  and  the  progressive  flight  of 
workmen  from  the  industrial  centers  have  a  direct  effect 
on  production,  i.  e.,  on  the  size  of  the  actual  output 
of  those  enterprises,  which  can  still  be  supplied  with 
the  other  elements  of  productive  activity.  The  loss 
of  labor  discipline  results  in  decreased  productivity 
of  labor,  which  also,  naturally,  affects  the  total  output 
in  the  sense  of  decreasing  it.  The  two  factors  together 
produce  an  admittedly  disastrous  decrease  of  produc- 
tion, rendering  practically  inoperative  what  still  re- 
mains of  the  technical  equipment  and  useless  what  is 
available  of  fuel  and  raw  materials. 

In  transportation,  cars  and  boats  at  times  wait  for 
days  and  even  weeks  before  being  loaded  or  unloaded, 
because  no  workmen  can  be  found  to  do  the  work. 
Those  that  are  set  to  work  fall  far  short  of  normal  speed 
of  work.* 

In  the  work  of  railroad  repair,  both  shortage  and 
productivity  of  labor  are  important  factors.  All  of 
the  important  car  and  locomotive  works  in  Soviet  Rus- 
sia are  united  in  a  group,  which  is  known  under  the 
name  of  "Gomza"  (The  State  Association  of  Metal- 
lurgical  Works).      This   powerful   trust   includes   the 

•  Ekonomicheskaya  Zhisn,  July  25,  1920. 


LABOE  177 

Sormovo,  Kolomna,  Kolubaki,  Phoenix,  Mytishcliinsky, 
Kharkov,  Lugansk,  Izhev,  Briansk,  and  a  number  of 
other  foundries.  If  we  consider  their  combined  output 
for  1916  as  100,  we  shall  find  that  the  output  for  1917 
was  70.8;  for  1918,  27;  for  1919,  30.7.*  In  charac- 
terizing the  work  of  the  '^Gomza"  group  during  1919, 
the  Moscow  Pravda  f  says : 

The  work  of  these  foundries  could  not  run  normally  dur- 
ing the  past  year,  but  it  could  and  should  have  given  better 
results  than  actually  achieved. 

During  the  first  half  of  the  year,  the  "Gomza"  group 
was  turning  out  an  average  of  5^/2  new  locomotives  a 
month ;  during  the  second  half  of  the  year,  the  average 
was  only  2%.  The  production  of  cars  and  of  metal 
parts  was  in  the  same  degree  of  intensity.  Taking 
these  results  into  account,  the  Pravda  continues : 

These  results  are  absolutely  insignificant,  if  we  recall  the 
fact  that  each  one  of  these  foundries  during  the  past  years 
used  to  turn  out  hundreds  of  locomotives  and  cars.  The 
organized  proletariat  has  a  right  to  demand  from  these 
foundries,  which  are,  moreover,  placed  in  privileged  condi- 
tions, much  greater  intensity  and  productivity  of  labor.  .  .  . 
The  figures  for  1919,  even  if  we  take  into  consideration  the 
shortage  of  fuel  and  materials,  are  still  utterly  insignificant. 

The  situation  at  the  Briansk  works,  which  is  the 
second  largest  in  the  whole  "Gomza"  group,  may  serve 
as  an  illustration.  In  19 IG  the  number  of  employed 
there  was  16,132.  By  1920,  the  number  of  workmen 
decreased  to  7,718.  The  rest  had  simply  disappeared. 
The  number  of  working  hours  had  been  reduced  from 

•  Ekonomicheskaya   Zhisn,   February   20,    1920. 
t  February  15.   1920. 


178  ECONOMICS  OF  COMMUNISM 

ten  to  eight.  The  percentage  of  absences  increased 
from  ten  to  forty.  Thus,  the  total  number  of  hours  of 
work  decreased  four  times.  The  present  equipment 
of  the  foundry  and  its  avaihible  supply  of  fuel  and  mate- 
rials make  possible  the  employment  of  at  least  3,600 
more  workmen.* 

Turning  now  to  another  basic  industry,  viz.,  mining, 
we  find  a  striking  decrease  in  the  productivity  of  labor, 
which  still  shows  no  turning  point.  If  we  take  the 
Donetz  coal  basin,  the  total  comparative  output  of 
which  was  given  in  the  preceding  chapter,  we  find  that 
the  average  monthly  production  of  coal  per  man  was, 
for  the  first  four  months  of  1913,  760  pouds.  For 
the  corresponding  period  of  1919,  the  monthly  average 
was  between  250  and  280  pouds  per  man,  reaching  in 
April  130  pouds  for  some  localities.  The  correspond- 
ing average  for  1920  was  240  pouds,  with  the  minimum 
again  dropping  to  130  pouds  during  the  month  of 
April,  f 

Again,  as  with  total  production,  the  fluctuations  in 
the  productivity  of  labor  in  the  Donetz  basin  may  be 
explained  partly  by  the  fact  of  the  civil  war.  And 
again,  a  much  better  set  of  facts  on  the  productivity  of 
labor  is  furnished  by  the  Moscow  coal  basin,  which  was 
not  affected  directly  by  the  exigencies  of  the  war.  The 
following  table  shows  the  total  output,  the  average 
number  of  workmen,  and  the  productivity  of  labor  in 
the, Moscow  coal  basin.:}: 

•  Ekonomicheskaya  Zhisn,   March    7,    1920. 

t  Ihid.,   June    24,    1920. 

t  The  figures  for  the  total  output  and  the  average  number  of  workmen 
are  taken  from  Ekonomicheskaya  Zhisn,  June  24,  1920  ;  the  productivity 
is  computed  on  the  basis  of  these  two  sets  of  figures. 


LABOR  179 

Table  No.  5 
Productivity  of  Labor  in  Moscow   Coal  Basin 

First  four  months  of 
1916        1919      1920 

Total  output  in  thousand  of  pouds. . .  9,072  9,835  10,610 

Average  number  of  workmen 3,210  12,600  14,000 

Production  in  pouds  per  man  per  month 

(rough  estimate) 706  195  189 

An  interesting  point  in  the  comparison  of  the  pro- 
ductivity of  the  Donetz  and  the  Moscow  basins  is  the 
fact  that  the  productivity  of  the  former  seems  larger 
than  that  of  the  hitter.  It  is  possible,  however,  that  this 
difference  is  much  smaller  than  it  appears  from  the 
figures  given  above.  It  appears  that  a  number  of 
workmen  in  both  basins  were  employed  part  of  the 
time  on  construction  work  and  not  on  actual  mining 
work.  The  number  thus  employed  and  the  time  spent 
on  other  work  than  that  of  mining  proper  is  not  given. 
But  in  any  event,  the  productivity  in  tbe  Moscow  basin 
is  not  higher  than  that  of  the  Donetz  basin. 

The  really  striking  thing  is  that  both  basins  show 
a  decrease  of  productivity  in  1920,  as  compared  with 
1919.  It  is  true  that  this  decrease  is  slight,  but  the 
very  fact  that  there  should  be  any  decrease  at  all  is 
tremendously  important.  In  connection  with  this  it 
is  interesting  to  note  that  the  Donetz  coal  basin  is 
one  of  the  first  industrial  fields  in  which  the  new  system 
of  premiums  for  higher  productivity  is  being  intro- 
duced. 

Let  us  consider  now  some  of  the  other  industries 
The  factories,  engaged  in  the  working  over  of  copper, 


180  ECONOMICS  OF  COMMUmSM 

nickel  and  other  "colored"  metals,  are  amply  supplied 
with  raw  materials,  as  we  have  already  seen.  Two  of 
these  factories,  the  Karzhagsky  and  the  Siversky 
works,  sufficiently  supplied  also  with  fuel  (which  is  of 
local  origin,  being  entirely  wood,  easily  delivered)^ 
produced  only  half  of  the  amounts  that  were  expected 
of  them  last  year.  The  reason  for  this  lies  in  the 
shortage  and  the  low  productivity  of  labor.* 

In  the  textile  industry,  not  a  single  one  of  its  various 
branches  could  turn  out  the  amounts  prescribed  by  the 
Government  progTam  of  production,  in  most  cases 
because  of  lack  of  skilled  labor.  In  flax  weaving,  for 
example,  a  branch  of  the  textile  industry  which  is  more 
than  amply  supplied  with  raw  material,  scarcely  40  per 
cent,  of  the  looms  were  in  operation  in  February,  1920, 
because  of  lack  of  skilled  labor.* 

In  the  rubber  factories,  also  supplied  with  raw  mate- 
rials, the  output  during  the  first  half  of  1920  was  five 
per  cent,  of  the  normal,  or  ten  per  cent,  of  the  Govern- 
ment program.  The  reason  was  partly  lack  of  liquid 
fuel,  but  mostly  shortage  of  labor. f 

And  so  it  is  in  all  the  other  branches  of  industry: 
shortage  of  labor,  coupled  with  the  reduction  of  pro- 
ductivity due  to  loss  of  labor  discipline,  reduce  produc- 
tion to  only  a  very  small  part  of  the  normal  output  or 
even  of  the  extent  still  possible  under  the  existing 
conditions.! 

*  Ekonomicheskaya  Zhisn,  June  24,   1920. 

t  lUd. 

%  The  following  quotation  from  thj  Petrograd  Krasnaya  Oazeta,  July 
4,  1920,  gives  a  concrete  instance  of  what  this  means,  furnishing,  in- 
cidentally, a  rather  striking  picture  of  general  conditions  under  which 
workmen   live   in   a   large   industrial  center : 

"During  the  months  of  April  and  May  the  number  of  cars  and  locomo- 


LABOR  181 

In  its  efforts  to  raise  productivity  and  increase  pro- 
duction, the  Soviet  Government  turns  its  attention  in 
two  directions:  in  the  first  place,  it  makes  attempts  to 
get  more  intensive  and  more  productive  work  out  of 
the  workmen  who  are  still  at  their  place  of  employ- 
ment ;  and  in  the  second  place,  it  makes  desperate  efforts 
to  overcome  the  shortage  of  labor  by  the  application  of 
measures  which  are  truly  drastic. 

5.    Premiums  and  Penalties 

In  discussing  the  elements  which  the  Soviet  economic 
system  has  taken  over  from  the  capitalistic  system,  Kiy, 
a  noted  Soviet  publicist,  mentioned  two  with  reference 
to  labor,  viz.,  the  system  of  special  reward  for  special 
work,  and  compulsion  as  applied  to  labor.*  The  Soviet 
Government  has  improved  on  both  of  these  devices  of 

tlves  repaired  in  Petrograd  decreased.  In  March,  25  locomotives  were 
repaired  ;  in  April,  23  ;  in  May,  only  20.  With  the  cars  It  was  still  worse  : 
the  number  of  cars,  turned  out  of  the  repair  'hospitals'  in  April  was 
720,   and   in   May,  only   609. 

"The  number  of  workmen  engaged  in  these  repair  shops  has  been 
increasing,  slowly,  but  noticeably:  in  March  there  were  6,191  men;  in 
April,  6,207  ;  in  May,  6,417.  The  percentage  of  absence  from  work  has 
declined  everywhere ;  in  some  cases  the  attendance  at  the  shop  has 
reached  90  per  cent,  e.g.,  in  the  Onyega  shops.  Thus  we  have  more 
workmen,  a  smaller  percentage  of  absences,  and  still  the  work  of  repair 
does  not  go  any  better.  The  productivity  of  labor  has  fallen  still  more, 
and  the  program  prescribed  is  not  being  carried  out.  The  work  goes  on 
without   any  spirit. 

"One  of  the  things  that  have  influenced  work  is  the  fact  that  some  of 
the  workmen  are  busy  in  vegetable  gardens  until  late  at  night ;  in  the 
morning,  they  come  to  the  shops  all  tired  out,  and  the  work  does  not 
proceed  well.  Again,  some  of  the  workmen  take  part  at  night  in  special 
work  carried  on  by  groups  or  'artels'  of  workmen,  where  their  wages 
range  Jrom  one  to  three  thousand  roubles  a  night.  And  here,  too,  it  is 
not  difficult  to  understand  why  they  come  to  work  tired.  As  a  result, 
there  is  a  tremendous  expenditure  of  fuel,  yet  the  repair  work  is  done 
carelessly." 

•  Kiy  in  Ekonomicheskaya  Zhisn,  No.  6,  for  1920. 


182  ECONOMICS  OF  COMMUNISM 

the  capitalistic  economic  system,  the  first  in  the  form 
of  premiums ;  the  second  in  the  form  of  penalties. 

Several  more  or  less  elaborate  systems  of  premiums 
have  been  worked  out ;  in  each  case,  of  course,  the 
question  of  premiums  is  interrelated  with  that  of  pen- 
alties. Let  us  take  the  system  of  premiums  devised 
for  the  railroad  repair  shops  as  typical  of  the  elabo- 
rateness of  detail  and  the  interrelation  between  the 
premiums  and  tlie  penalties.* 

The  normal  productivity  of  one  of  the  pre-war  years 
is  taken  as  the  basis  of  the  norm  of  productivity  to  be 
applied  to-day.  For  purposes  of  present-day  produc- 
tion, this  norm  is  revised  downward  in  accordance  with 
the  technical  conditions,  the  general  lowering  of  labor 
standards,  and  other  factors  necessarily  affecting  pro- 
ductivity at  the  present  time.  On  the  basis  of  the  pre- 
war norm  and  the  present  conditions  which  inevitably 
affect  it,  a  new  norm  of  productivity  is  worked  out 
and  is  taken  as  the  standard. 

Minimum  productivity  is  taken  as  one-half  this 
standard ;  maximum  productivity  is  considered  as  twice 
the  standard. 

Full  wages  should  be  paid  only  for  productivity 
which  approximates  the  standard.  Deductions  from 
full  wages  are  permissible  for  productivity  which  falls 
below  the  standard,  but  does  not  go  beyond  the  mini- 
mum. Such  deductions,  however,  should  not,  in  any 
case,  constitute  more  than  one-third  of  the  full  wage. 

Premiums  allowed  for  increased  productivity  run 
as  high  as  100  per  cent,  of  the  regular  wages.     These 

*  This  description  of  the  promium  Kystem  in  the  railroad  repair  shops 
Is  taken  from  Ekonoviichcskaya  Zhisn,  July  11,  1920. 


LABOR  183 

premiums,  however,  are  not  distributed  in  equal  incre- 
ments ;  tJie  rate  of  increase  is  higher  at  the  first  stage, 
when  productivity  increases  from  the  standard  to  the 
"medium"  (half  way  between  the  standard  and  the 
maximum),  than  at  the  succeeding  stages. 

l^OT  do  all  the  workmen  employed  in  the  railroad 
repair  shops  have  the  same  opportunity,  under  this 
system  of  premiums,  of  receiving  the  maximum  pre- 
mium. All  the  workmen  are  divided  into  four  classeSp 
in  accordance  with  their  relative  importance  to  the 
industry.  In  the  first  class  are  the  skilled  workmen, 
engaged  in  production  proper ;  these  workmen  are  enti- 
tled to  the  100  per  cent,  premium  as  the  maximum,  if 
they  fulfill  the  conditions  prescribed.  In  the  second 
class  are  the  skilled  workmen,  engaged  in  auxiliary 
production  in  the  same  industry;  the  maximum  pre- 
mium set  for  them  is  seventy-five  per  cent.  In  the 
third  class  we  have  all  other  workmen  in  auxiliary 
production ;  their  maximum  premium  is  fifty  per  cent. 
Finally,  in  the  fourth  class  we  have  all  other  employees, 
such  as  watchmen,  etc. ;  their  maximum  premium  is 
twenty -five  per  cent.* 

An  indispensable  condition  for  the  receipt  of  the 
maximum  premium  in  each  of  these  classes  is  attend- 
ance at  work  on  every  working  day,  prescribed  as  nor- 
mal. Only  when  that  condition  is  fulfilled,  does  the 
computation  of  premium  on  the  basis  of  actual  output 
begin. 

Premiums  may  be  given  in  money  or  in  goods,  such  as 
food,  cloth,  etc.     The  system  of  premiums  established 

*  This  division  of  labor  into  classes  according  to  relative  importance 
obviously  goes  counter  to  some' of  the  fundamental  theses  of  the  economic 
theory  of  Communism.      Cf.  chapter  on  the  Theory  of  Communism. 


184  ECONOMICS  OF  COMMUNISM 

for  the  Donetz  coal  basin,  for  example,  provides  tliat 
the  premiums  to  the  workmen  should  be  given  in  cloth. 
For  carting  coal  from  the  mine  to  the  station,  a  pre- 
mium of  0.0007  of  an  arshin  of  cloth  is  given  for  each 
poud-verst;  in  the  work  of  loading  coal  into  railroad 
cars,  a  premium  of  one-quarter  of  an  arshin  per  car- 
load is  given.  These  premiums  are  computed  monthly. 
The  estimated  amount  of  cloth  required  for  such 
premium  every  month  is  24,000  arshins.*  The 
premiums  offered  to  the  administrative  and  technical 
personnel  for  speeding  up  the  shipments  of  coal  are  in 
money. 

The  system  of  premiums  has  not,  as  yet,  been  codified, 
and  is  not  therefore  uniform  for  the  whole  of  Soviet 
Russia.  But  the  system  of  penalties  for  idleness  result- 
ing from  absence  from  work  has  been  made  uniform  for 
the  whole  country  and  is  expressed  in  a  decree  of  the 
Council  of  People's  Commissaries,  issued  April  27, 
1920.t 

Article  1  of  this  decree  renders  a  workman,  guilty 
of  absence  from  work  without  a  legitimate  excuse  for 
a  period  of  not  over  three  days,  liable  to  a  number  of 
punishments.  In  the  first  place,  there  is  a  deduction 
from  his  regular  wages.  In  the  second  place,  a  deduc- 
tion is  made  from  any  premiums  to  which  he  may  be 

*  This  computation  is  made  in  Ekonomicheskaya  Zhisn,  May  15, 
1920,  and  refers  to  conditions  existing  in  April.  Since,  according  to 
Ekonomicheskaya  Zhisn,  June  24,  1920,  tbe  average  number  of  men 
employed  at  the  Donetz  basin  during  the  month  of  April  was  105,300, 
the  average  premium  per  man  amounts  to  less  than  one-quarter  of  an 
arshin,  or  something  like  six  inches  of  cloth.  Apparently  the  Govern- 
ment does  not  expect  the  Donetz  miners  to  avail  themselves  to  any 
considerable  extent  of  the  system  of  premiums. 

t  The  text  of  this  decree  was  published  in  Moscow  Izvestiya,  May 
11.   1920. 


LABOE  185 

entitled.  And  in  the  third  place,  he  is  compelled  to 
make  up  for  lost  time  by  working  on  holidays  or  after 
working  hours.  The  deductions  increase  with  the 
recurrence  of  absences.  Following  is  the  exact  word- 
ing of  this  decree  on  the  penalties  imposed  for  absence 
from  work  over  and  above  deductions  from  regular 
wages: 

For  the  first  day  of  absence,  fifteen  per  cent,  of  the  monthly 
premium  is  deducted;  for  the  second  day,  twenty-five  per 
cent.;  for  the  third  day,  sixty  per  cent.  Moreover,  the  idle- 
ness resulting  from  these  absences,  must  be  made  up  for  as 
work  under  labor  conscription,  after  working  hours  or  dur- 
ing holidays;  on  such  occasions,  the  workman  undergoing 
punishment  may  be  put  to  any  kind  of  work,  irrespective  of 
his  specialty,  and  receives  pay  according  to  set  scale,  without 
any  additions  for  premiums  or  overtime  work. 

An  attempt  to  evade  the  order  to  make  up  for  time 
lost  during  an  absence  is  considered  a  criminal  offense, 
and  the  offender  is  liable  to  arrest  in  a  concentration 
camp. 

Absences  covering  more  than  three  days  in  the 
course  of  a  month  are  also  considered  as  criminal 
offenses.  Workmen,  guilty  of  such  oft'enses,  should  be 
handed  over  to  a  disciplinary  court,  charged  with 
"sabotage,"  and  the  punishments  meted  out  to  them 
are  in  accordance  with  the  regulations  governing  such 
courts. 

The  managements  of  the  various  enterprises  are 
charged  with  the  duty  of  carrying  out  this  order  by 
keeping  strict  records  of  attendance  for  all  the 
employees  of  their  respective  enterprises.  Frequent 
investigations  by  the  Commission  for  Labor  Conscrip- 


186  ECONOMICS  OF  COMMUNISM 

tion  are  provided  for,  and  charges  for  criminal 
offenses  may  be  brought  against  the  managers  of  any 
enterprises  who  fail  to  keep  accurate  records  concern- 
ing the  work  of  all  of  the  employees  under  them. 

The  control  over  the  carrying  out  of  the  decree  and 
its  various  provisions  is  placed  in  the  hands  of  the 
Commission  for  Labor  Conscription,  acting  for  the 
Government,  and  the  factory  committees,  acting  as  the 
local  organizations  of  the  trade  or  professional  unions. 

Very  stringent  regulations  are  provided  for  ab- 
sences from  work  on  account  of  illness.  All  persons, 
seeking  to  be  relieved  from  work  on  account  of  ill 
health,  must  have  a  "hospital  certificate"  issued  to 
them  by  the  department  of  the  People's  Commissariat 
of  Public  Health  in  the  locality  in  which  they  live  or 
work.  In  this  certificate,  the  physician  under  whose 
care  the  sick  workman  finds  himself  must  note  the 
nature  of  the  disease,  the  date  on  which  it  began,  the 
dates  appointed  for  visits  to  the  hospital  or  the  dispen- 
sary, the  dates  on  which  such  visits  were  actually  made, 
and  the  date  when  the  patient  is  again  fit  for  duty. 
Similar  certificates  should  be  obtained  by  those  who 
are  kept  in  quarantine  on  account  of  infectious  disease 
in  the  family,  or  who  seek  to  be  relieved  from  work  in 
order  to  render  care  to  a  sick  member  of  the  family. 

A  workman,  desiring  to  go  for  treatment  to  another 
locality  and  not  the  one  in  which  he  is  working,  may  be 
granted  permission  to  do  so,  but  the  destination  must 
be  mentioned  in  the  pennit  issued.  Only  persons  "in 
need  of  climatic  changes  or  special  treatment  in  sana- 
toria or  dietetic  institutions"  may  be  issued  such  per- 
mits, and  even  then  only  in  case  such  special  treatment 


LABOE  187 

cannot  be  provided  in  the  locality  in  which  the  patient 
works  or  in  case  continued  residence  at  the  place  of 
work  may  have  injurious  effects  on  the  health  of  the 
patient. 

When  issued  a  permit  to  go  elsewhere  for  treatment, 
a  workman  must  immediately  report  to  the  manage^ 
ment  or  inform  the  enterprise  or  institution  in  which 
he  is  employed.  His  absence  under  the  original  permit 
must  not  exceed  two  months.  If  an  extension  of  time 
is  found  necessary,  it  may  be  granted  by  the  department 
of  the  Commissariat  of  Public  Health  at  the  place 
where  the  patient  is  undergoing  treatment.  The 
time  of  stay  in  a  health  resort  or  a  sanatorium  must 
be  certified  by  the  physician  in  charge.  When  treat- 
ment for  health  is  taken  in  a  village,  the  time  of  stay 
must  be  certified  by  the  local  Soviet. 

Violations  of  these  regulations  are  punishable  as 
offenses  under  the  criminal  code. 

A  similar  decree  for  the  development  of  labor  dis- 
cipline through  the  regulation  of  lateness  and  tardiness 
in  attending  meetings  and  conferences,  in  which  work- 
men are  represented,  was  issvied  in  April,  1920.* 

Members  of  any  conferences  or  committees,  who 
come  to  a  regular  meeting  late  by  more  than  five  min- 
utes, receive  a  reprimand  from  the  presiding  officer, 
which  is  entered  in  the  minutes  of  the  meeting.  A 
second  offense  of  the  same  nature  is  punishable  by  a 
fine  equal  to  five  days'  wages  and  a  reprimand  pub- 
lished in  the  public  press.  At  a  special  conference  or 
meeting,  lateness  of  five  minutes  is  punishable  by  a 
fine  of  three  days'  wages  and  a  reprimand  published  in 

♦  Reported  in  the  Petrograd  Krasnaya  Gazeta,  April  25,  1920. 


188  ECONOMICS  OF  COMMUNISM 

the  public  press;  lateness  of  ten  minutes  is  punishable 
by  a  fine  of  seven  days'  wages  and  a  similar  reprimand. 
Those  who  are  more  than  ten  minutes  late  or  do  not 
appear  at  the  special  meeting  or  conference  at  all  may 
be  punished  by  a  still  larger  fine,  a  public  reprimand, 
and  also  by  compulsory  work  on  holidays.  In  this  last 
case,  the  punishment  is  fixed  by  the  presiding  officer 
of  the  meeting  or  conference,  in  administrative  pro- 
cedure, without  invoking  the  assistance  of  the  courts 
or  tribunals. 

Directors  and  managers  of  institutions  or  enterprises 
who  are  requested  to  send  representatives  to  confer- 
ences and  who  fail  to  do  so  without  furnishing  good 
reason  for  it,  are  liable  to  fine,  reprimand  and  compul- 
sory labor  on  holidays  at  the  discretion  of  the  presiding 
officer  of  the  conference  in  question. 

6.    The  Militarization  of  Labor 

The  Soviet  regime  has  been  very  thorough  in  its 
application  of  the  principle  of  compulsion  to  labor. 
The  penalties  established  for  the  purpose  of  increasing 
the  productivity  of  labor  constitute,  naturally,  but  one 
phase  of  the  problem ;  they  are  intended  for  dealing 
with  those  workmen  who  still  remain  at  their  places  of 
employment.  A  more  serious  phase  of  the  problem 
consists  in  overcoming  labor  shortage,  by  bringing  new 
workmen  into  labor  centers.  To  this  phase  of  the 
problem  the  Soviet  regime  is  applying  methods  that 
are  purely  military  in  character,  and  the  whole  new 
system  of  dealing  with  the  question  of  labor  has  been 


LABOR  189 

characterized  by  the  Soviet  leaders  as  that  of  the 
"militarization"   of  labor. 

The  first  and  fundamental  element  in  this  system 
is  the  establishment  of  the  principle  of  universal  com- 
pulsory labor  service.  This  means  that  every  person 
in  the  country,  in  good  health  and  capable  of  perform- 
ing useful  work,  is  obliged  to  engage  in  some  such 
work.  If  any  such  person  refuses  to  do  his  or  her 
duty,  he  or  she  may  be  compelled  to  do  so  by  the  state. 
The  second  element  in  the  system  of  militarization  of 
labor  is  the  introduction  of  universal  labor  conscrip- 
tion. We  are  here  dealing  with  terms  that  are  identi- 
cal with  similar  terms  applied  to  military  duty.  In  a 
country  which  has  established  by  law  the  principle  of 
universal  military  service,  all  persons  subject  to  such 
service  may  be  conscripted  at  the  discretion  of  the  state. 
Once  conscripted,  such  persons  lose  their  freedom  of 
choice  and  freedom  of  motion  and  submit  entirely  to 
the  authority  of  the  state.  In  labor  conscription,  intro- 
duced in  Russia  by  the  Soviet  regime,  we  have  pre- 
cisely the  same  conditions  applied  to  labor. 

In  a  proclamation  issued  by  the  People's  Commis- 
sariat of  Labor  and  sent  out  from  Moscow  by  wireless 
on  April  15,  1920,  for  the  purpose  of  popularizing  the 
idea  of  labor  conscription,  this  term  was  defined  as 
follows : 

Universal  labor  conscription  means  that  every  workman 
is  obliged  to  do  the  work  which  is  assigned  to  him  by  the 
state. 

The  first  preliminary  condition  to  the  carrying  out 
of  the  system  of  labor  conscription  is  a  general  census 


190  ECONOMICS  OF  COMMUNISM 

or  registration  of  all  citizens  subject  to  labor  duty. 
The  next  condition  is  their  classification  by  trades. 
Then  an  analysis  must  be  made  of  the  labor  needs  of 
the  country,  and  a  classification  of  the  various  enter- 
prises from  the  point  of  view  of  their  labor  require- 
ments. For  the  purpose  of  carrying  out  these  con- 
ditions, a  special  Committee  on  Universal  Labor 
Conscription  was  appointed,  under  the  presidency  of 
Dzerzhinski,  who  also  retains  his  post  as  the  President 
of  the  All-Russian  Extraordinary  Commission  for 
Fighting  the  Counter-Revolution.  The  first  sitting  of 
the  Committee  on  Labor  Conscription  was  held  at  the 
end  of  February,  19S0.* 

The  question  of  universal  labor  service  and  con- 
scription was  stimulated  by  the  problems  arising  out 
of  the  need  for  the  demobilization  of  the  Red  Anny, 
which  seemed  approaching  at  the  end  of  1919.  The 
whole  question  in  its  larger  ramifications,  as  it  then 
presented  itself  to  the  Soviet  leaders,  was  somewhat  as 
follows:  The  industrial  centers  were  rapidly  becoming 
depopulated  and  labor  shortage  approaching  a  degree 
of  acuteness  that  was  disastrous.  Most  of  the  workmen 
had  fled  to  the  villages.  Here  was  an  army  of  men 
(perhaps,  a  half-million  in  all),  trained  to  some  degree 
in  discipline,  made  up  of  all  sorts  of  trades  and  profes- 
sions. Properly  regrouped  in  accordance  with  the 
various  occupations,  officered  by  industrial  specialists, 
instead  of  military  ones,  it  would  present  a  tremendous 
addition  to  the  labor  forces  of  the  country.  Moreover, 
if  demobilized,  most  of  it  would  go  to  the  villages, 
leaving  the  question  of  industrial  labor  precisely  where 

•  Ekonomicheskaya   Zhisn,   February    26,    1920. 


LABOR  191 

it  was  before.*  The  transformation  of  the  Red  Armies 
into  armies  of  labor  seemed  entirely  feasible  also  for 
the  reason  that  the  country  would  still  have  an  easily 
mobilized  and  already  trained  force  in  case  of  military 
emergency. 

As  originally  conceived  by  Trotsky  (who  is  usually 
credited  with  the  whole  idea  of  the  militarization  of 
labor),  the  plan  of  fitting  the  Red  Anny  for  its  labor 
duties  w^ould  be  to  make  immediately  "a,  census  of  all 
the  soldiers  of  the  Red  Army  by  trades,  so  that  whenever 
demobilization  would  be  deemed  possible,  the  skilled 
workmen  would  be  immediately  set  to  work  wherever 
needed."  As  for  unskilled  labor,  it  was  proposed  to 
mobilize  all  those  classes  which  had  not  been  called  in 
the  previous  mobilizations  and  to  demobilize  before 
the  expiration  of  their  term  those  who  had  been  re- 
cently called  into  the  Red  Army,  on  condition,  however, 
that  "they  should  undertake  to  work  for  a  certain  fixed 
period  of  time  in  industries  near  their  place  of  birth."  f 

Universal  labor  service  should,  of  course,  extend 
over  the  workmen  already  employed  at  the  various  en- 
terprises. Thus  the  system  of  the  militarization  of 
labor  would  be  based,  primarily  (from  the  point  of 
view  of  the  first  stages  of  its  introduction),  upon  the  de- 
mobilized Red  Army  and  the  mobilization  of  the  work- 
men already  engaged  at  various  enterprises.  The  latter 
would  become  "fixed"  at  their  place  of  employment, 
having  no  right  to  go  elsewhere,  unless  ordered  to  do 
so  by  the  proper  authorities,  but  obliged  to  go  wherever 

*  In  his  report  on  the  Red  Army,  presented  to  the  Seventh  Congress 
of  Soviets,  Trotsky  estimated  that  over  eighty  per  cent,  of  the  total 
effective  strength  of  the  Red  Army  had  been  recruited  in  the  villages. 

t  Moscow  Izvestiya,  December  29,   1919. 


193  ECONOMICS  OF  COMMUNISM 

sent,  when  ordered  to  do  so.  The  combined  labor 
''fund"  thus  created  would  have  almost  every  character- 
istic of  an  organized  army  from  the  point  of  view  of 
mobility.  Since  every  branch  of  the  country's  eco- 
nomic life  would  be  managed  and  administered  from 
the  center  in  accordance  with  a  unified  economic  plan, 
under  this  system  of  militarization  it  would  be  possible 
to  "distribute  labor  among  agriculture,  industry  and 
transportation,"  as  required  by  each  of  these  branches. 
In  giving  his  conception  of  the  militarization  of 
labor,   Trotsky  defined  it  as  follows:* 

The  working  masses,  under  a  unified  system  of  economy, 
should  be  in  a  position  to  be  moved,  sent  and  ordered  from 
place  to  place  in  exactly  the  same  manner  as  soldiers.  This 
is  the  basis  of  the  militarization  of  labor,  and  without  this 
we  cannot  speak  seriously  of  any  organization  of  industry 
on  a  new  basis  in  the  present-day  conditions  of  disorganiza- 
tion and  starvation. 

The  whole  system  of  the  militarization  of  labor,  as  it 
is  being  applied  by  the  Soviet  Government,  is  based  on 
this  conception  as  its  fundamental  idea. 

One  part  of  Trotsky's  original  plan,  however,  had  to 
be  given  up,  at  least  for  the  time  being:  the  use  of 
the  demobilization  of  the  Red  Army.  The  war  with 
Poland  pushed  the  question  of  the  demobilization  into 
the  background.  But  before  this  happened,  an  experi- 
ment was  made,  which,  aside  from  its  general  interest, 
also  served  as  a  test  of  the  following  assertion  which 
Trotsky  made  in  his  report  to  the  Party  Congress : 

•  Report  to  the  Ninth  Congress  of  the  Russian  Communist  Party, 
Moscow  Izvestiya,  March  21,   1920. 


LABOR  193 

In  the  transitional  epoch  in  the  organization  of  labor, 
compulsion  plays  a  very  important  part.  The  assertion  that 
free  labor,  i.e.,  freely  employed  labor,  is  more  productive  than 
labor  through  compulsion,  is  correct  only  when  applied  to 
the  feudalistic  and  bourgeois  orders  of  society. 

In  January,  1920,  the  Third  Eed  Army  was  trans- 
formed into  the  First  Labor  Army.  This,  however, 
did  not  mean  its  demobilization.  The  army  was  not 
reorganized  in  accordance  with  the  occupations  of 
the  soldiers  before  the  war.  On  the  contrary,  it  was 
left  intact,  only,  instead  of  being  sent  to  a  camp,  it 
was  given  such  work  as  could  be  generally  perfoi-med 
by  unskilled  labor;  wood  gathering,  loading,  etc.  In 
the  order,  issued  to  the  First  Labor  Army  by  Trotsky 
as  the  President  of  the  War  Revolutionary  Council  of 
the  Republic,  it  was  demanded  that  discipline  in  the 
ranks  of  the  army  should  be  preserved  in  the  same 
manner  as  it  was  at  the  front,  and  that  "the  revolution- 
ary tribunals  should  punish  all  those  who  prove  to  be 
lazy,  all  parasites  and  looters  of  national  property." 
Moreover,  the  army  was  requested,  wherever  it  was  pos- 
sible, "to  begin  and  end  work  to  the  sound  of  revo- 
lutionary hymns  and  songs."  The  order  ended  with 
an  appeal  not  to  "lower  the  Red  standards"  on  the 
labor  front.* 

How  did  the  army  respond  to  this  appeal  and  react 
to  this  attempt  to  organize  the  work  of  mobilized  labor 
in  a  fervid  spirit  ? 

In  reporting  the  work  of  the  First  Labor  Army  dur- 
ing the  first  period  of  its  work,  when  the  spirit  of 

•  The  text  of  the  order  was  published  in  Petrograd  Erasnaya  Oazeta, 
January   18,    1920. 


194  ECONOMICS  OF  COMMUNISM 

enthusiasm  must  have  heen  high  if  it  ever  was,  a  Soviet 
economist  makes  the  following  statement:* 

The  official  report  on  the  work  of  the  First  Labor  Army 
for  the  period  of  January  25-28,  1920,  published  in  Eho- 
nomiclieshaya  Zhisn,  No.  21,  calls  attention  to  two  important 
facts.  In  the  first  place,  there  was  an  excessively  small  num- 
ber of  workers:  of  an  army  of  150,000,  only  23,634  were  at 
work,  of  whom  scarcely  15,000  were  soldiers.  In  the  second 
place,  the  productivity  of  labor  was  exceedingly  low.  For 
example,  in  the  district  of  Yalutovodsk,  1,321  military  work- 
ers during-  the  three  days  prepared  57  cubic  sazhen  of  wood, 
which  represents  about  one-seventieth  cubic  sazhen  per  man 
per  day,  or  thirty  times  less  than  the  standard  of  1916.  The 
productivity  of  "civilian"  workers,  given  in  the  same  state- 
ment for  the  station  of  Onoupinskaya,  was  almost  five  times 
greater  than  that  of  the  military  workers,  although  it  was 
still  six  times  smaller  than  the  standard  for  1916. 

The  author  of  this  article  is  a  good  Communist  and, 
by  no  means,  an  opponent  of  the  system  of  militariza- 
tion. In  view  of  this,  the  discrepancy  between  his  con- 
clusions and  Trotsky's  optimistic  assertion  seems  all  the 
more  striking  and  important. 

7.     Labor  Desertion 

The  system  of  militarization,  as  applied  in  Soviet 
Russia  to  the  labor  situation,  has  given  rise  to  a  new 
term,  never  used  before  because  there  was  no  occasion 
for  using  it,  viz.,  labor  desertion.  In  the  proclamation 
of  the  Commissariat  of  Labor,  mentioned  above,  a  labor 
deserter  is  defined  as  any  person  who  "evades  labor 
conscription." 

*  S.  Strumilin,  article  on  "Labor  Armies  and  the  Productivity  of 
Labor,"  Ekonomicheskaya  Zhisn,  February  19,   1920. 


LABOR  195 

Specifically,  this  term  is  particularly  applicable  to 
those  workmen  who  had  left  their  places  of  employ- 
ment in  the  industrial  centers  and  had  fled  to  the  vil- 
lages. The  "extraction"  of  these  workmen  from  the 
rural  districts,  i.  e.,  their  return  to  the  industrial  cen- 
ters and  to  the  cities  generally,  is  one  of  the  most  press- 
ing problems  in  the  whole  labor  situation  in  Soviet 
Russia. 

In  January,  1920,  hope  was  still  entertained  in  some 
quarters  that  this  "extraction"  could  be  done  without 
the  application  of  methods  of  coercion,  merely  by  in- 
ducing the  workmen  to  return  voluntarily.  At  the 
Conference  of  Provincial  Committees  of  the  Depart- 
ment for  the  Registration  and  Distribution  of  Labor, 
referred  to  at  the  beginning  of  this  chapter,  the 
opinion  prevailed  that  compulsion  should  be  applied 
only  if  every  effort  of  inducing  the  workmen  to  return 
voluntarily  should  fail.  The  Conference  believed  that 
voluntary  return  on  a  very  extensive  scale  was  possible, 
because  most  of  those  who  had  gone  to  the  villages  did 
not  find  conditions  there  entirely  satisfactory;  for  ex- 
ample, the  attitude  which  the  newcomers  encountered 
on  the  part  of  the  masses  of  the  peasantry  was  seldom 
anything  but  hostile.  But  it  was  recognized  that  cer- 
tain conditions  would  have  to  be  met  by  the  Govern- 
ment,  if  this  voluntary  return  should  take  place. 

Among  these  conditions  were  the  following:  the  ne- 
cessity of  supplying  the  workmen  with  good  traveling 
facilities  and  with  food  while  on  the  road;  the  need 
of  preparing  lodgings  for  them  at  the  places  where 
they  were  being  sent  and  of  providing  those  who  were 


196  ECONOMICS  OF  COMMUNISM 

going  to  districts  poorly  supplied  with  food  with  ration 
for  at  least  one  month  at  the  "fixed"  prices. 

As  a  condition  preparatory  to  any  measures  of  com- 
pulsion which  might  be  applied,  the  Conference  rec- 
ommended the  introduction  of  "labor  books"  all  over 
the  country,  and  not  alone  in  Petrograd  and  Moscow, 
as  it  had  been  until  then.  This  measure  was  considered 
of  importance  not  only  for  ordinary  cases  of  labor  deser- 
tion, but  also  for  purposes  of  classification  according 
to  trade  and  occupational  specialty  and  training. 

There  are  no  indications  of  any  improvement  of  the 
labor  situation  from  the  point  of  view  of  voluntary 
return  during  the  months  following  the  Conference; 
for  the  conditions  recommended  by  the  Conference 
were  obviously  impossible  for  the  Government  to  carry 
out.*     Measures  of  compulsion,  however,  began  to  be 

•  The  following  description,  published  in  a  German  newspaper,  the 
Hamburger  FremdenUatt,  of  September  25,  1920,  gives  a  picture  of  a 
militarized  Russian  factory,  as  seen  by  a  group  of  German  workmen, 
brought  over  from  Germany  by  the  Soviet  Government ;  it  was  written 
by  one  of  these  workmen  after  their  return  to  their  native  land  : 

"When  we  were  brought  to  Kolomna,  we  saw  an  immense  fac- 
tory, but  not  entirely  without  workmen,  as  we  had  been  told,  but  with 
about  5,000  men,  working  under  military  guards.  As  this  was  contrary 
to  our  contracts  with  the  Soviet  Government,  we  sent  three  of  our 
number  to  Moscow  to  negotiate  with  the  Commissar  of  Labor  ;  for  we 
saw  that  we  had  been  deceived  and  had  fallen  prey  to  slave  dealers. 
Our  delegation  returned  after  a  few  days,  and  reported  that  the  only 
promise  that  would  be  given  them  was  that  work  would  be  found  for  us 
in  factories  among  Russian  workmen,  on  the  same  conditions  as  the 
Russians. 

"In  the  meantime  we  were  lodged  in  an  empty  school  house,  where 
we  had  to  sleep  on  the  floor  and  received  scarcely  anything  to  eat. 
Representatives  of  the  Russian  Government  visited  us  there  and  insulted 
us,  calling  us  "pleasure  tourists,"  "counter-revolutionists,"  "unbidden 
guests,"  etc.  Many  of  us  became  ill,  and  when  we  complained  again 
to  Moscow,  we  were  told  that  we  ought  to  be  ashamed  of  ourselves  for 
wanting  better  conditions  than  the  Russian  workmen.  .  .  .  We  were  told 
that  we  ought  not  to  receive  any  food  at  all ;  as  it  was,  our  ration 
consisted  of  two  hundred  grams  of  bread  per  day  and  of  soup  made  of 
fish  bones.  Eight  of  us  escaped.  Then  the  rest  were  arrested,  locked 
in  freight  cars,  and  left  there  for  several  days  without  any  food,  under 


LABOR  197 

applied  extensively  soon  after  that.  At  the  end  of 
May,  a  special  order  on  labor  desertion  was  issued 
by  the  Chief  Committee  on  Labor  Conscription,  provid- 
ing a  series  of  punishments  for  various  forms  of  labor 
desertion.* 

In  accordance  with  this  order,  all  militarized  and 
non-militarized  industrial  enterprises,  institutions  and 
Soviet  estates,  must  keep  accurate  records  of  all  their 
workmen  and  employees,  showing  the  place  of  their 
birth,  the  permanent  residence  of  their  families,  and 
the  record  of  each  with  regard  to  labor  conscription. 

Any  person,  absent  from  work  or  leaving  his  work 
before  closing  time  and  offering  no  explanation,  is 
considered  a  labor  deserter.  Every  case  of  this  kind 
must  be  reported  to  the  local  Subsection  of  the  Com- 
mittee on  the  Registration  and  Distribution  of  Labor 
and  also  to  the  local  Commission  on  Desertion,  which 
is  a  part  of  the  Committee  on  Labor  Conscription. 
The  duty  of  locating  the  deserter  devolves  upon  the 
Commission  on  Desertion.  If  a  deserter  cannot  be 
found  immediately,  an  investigation  should  be  made 
by  inquiring  of  his  family  and  in  other  manner.  Should 
the  investigation  disclose  the  deserter's  whereabouts, 
the  Commission  on  Desertion  in  that  locality  must 
be  immediately  informed,  in  order  that  the  deserter 
could  be  arrested  there. 

Any  person,  possessed  of  special  knowledge  or  train- 
ing, failing  or  refusing  to  register  as  a  specialist  and 
thus   attempting  to  evade  the  work  for  which  he  is 

military  guard.     Finally,  we  were  taken  to  Moscow  and  reached  there 
looking,  like  corpses." 

*  The  official  text  of  this  order  appeared  in  Moscow  Izvestiya,  May 
28,    1920. 


198  ECONOMICS  OF  COMMUNISM 

especially  fitted,  is  also  considered  as  a  labor  deserter 
and  is  liable  to  arrest  as  such. 

The  following  punishments  are  provided  for  labor 
desertion,  in  the  wording  of  paragraph  6  of  the  order: 

1.  A  -workman,  guilty  of  leaving  his  work  and  found 
within  not  over  three  days  thereafter,  if  this  is  his  first  of- 
fense, should  be  returned  to  the  place  of  his  employment 
and  brought  before  a  disciplinary  court  on  charges  of 
sabotage. 

2.  A  workman,  guilty  of  a  longer  absence  or  of  recurrent 
desertions,  is  liable  to  imprisonment  for  a  period  of  not 
over  two  weeks  or  to  impression  into  a  disciplinary  labor  de- 
tachment for  a  period  of  not  over  six  months. 

3.  A  person,  failing  to  report  for  mobilization,  ordered 
for  the  performance  of  public  works,  may  be  punished  by  a 
fine  and  public  compulsory  labor,  or  by  imprisonment  for 
a  period  not  exceeding  three  weeks. 

4.  A  person,  concealing  his  specialty,  or  failing  to  register 
for  work  for  which  he  is  especially  fitted,  in  case  he  can 
furnish  a  good  excuse,  is  liable  to  a  fine  or  imprisonment 
for  not  over  two  weeks,  and  following  that,  impression  into 
service  according  to  their  specialty ;  if  no  excuse  can  be 
offered,  the  offender  may  be  sent  to  a  disciplinary  labor 
detachment  far  a  period  not  exceeding  six  months,  or 
brought   before   the  Provincial   Revolutionary   Tribunal, 

Provision  is  also  made  for  persons,  "guilty  of  aiding 
or  giving  refuge  to  labor  deserters."  Such  persons  may 
be  punished  by  "fines,  or  by  partial  or  complete  con- 
fiscation of  their  property,  as  well  as  by  imprisonment 
for  a  period  not  exceeding  two  weeks;  in  more  serious 
cases,  they  may  be  brought  before  the  Provincial  Revo- 
lutionary Tribunal." 

Thus,  by  means  of  these  measures  of  coercion  and 
of  other  measures  of  similar  character  and  of  equal 


LABOR  199 

stringency,  the  Soviet  regime  hopes  to  inculcate  in  the 
people  those  habits  of  work  which  are  the  prerequisite 
of  the  final  stage  of  Communism,  as  required  by  the 
theory.  In  the  meantime,  for  the  transitional  period, 
labor  conscription  is  necessary,  upheld,  in  Trotsky's 
words,*  by  "measures  of  a  compulsory  character,  i.  e., 
in  the  final  analysis,  by  the  military  force  of  the  prole- 
tarian state." 

So  far,  however,  these  methods  of  compulsion  have 
scarcely  been  successful.  For  example,  a  serious  at- 
tempt was  made  to  carry  out  a  plan  of  mobilization  of 
general  labor  for  the  work  of  gathering  wood  fuel  in 
and  around  Petrograd.  The  results  of  this  mobiliza- 
tion were  as  follows :  According  to  Order  No.  30  of 
the  Committee  on  Labor  for  the  Province  of  Petro- 
grad, the  number  of  persons  ordered  to  report  for  work 
was  27,629.  The  actual  number  of  those  who  reported 
was  2,967.  The  cases  of  "labor  desertion"  were  par- 
ticularly numerous  in  the  district  of  Petrograd  itself. 
There  it  was  possible  to  mobilize  only  835  persons  out 
of  a  total  of  12,765  expected.  The  amount  of  work 
expected  from  these  mobilized  workmen  was  321,530 
cubic  sazhen  of  wood  and  1,147,970  logs;  the  actual 
production  was  77,298  cubic  sazhen  of  wood  and  57,- 
020  logs.f 

*  Moscow  Izvestiya,   December   29,   1919. 

t  Petrograd  Krasnaya  Gaeeia,  January  1,  1921.  It  is  interesting  to 
note  some  of  the  reasons  that  the  paper  assigns  for  this  state  of  affairs: 
"The  local  authorities  take  a  bureaucratic  attitude  toward  the  carrying 
out  of  labor  mobilization.  Being  afraid  to  hurt  their  relations  with  the 
population,  they  do  not  take  the  proper  measures  of  compulsion,  allow 
great  latitude  in  excusing  cases  of  illness,  and  sometimes  assign  their 
friends  to  easier  work.  Seeing  these  weaknesses  on  the  part  of  the 
authorities,  the  people  called  are   in  no  hurry  to  report  for  work." 


CHAPTER  IV 


MANAGEMENT 


If,  according  to  the  economic  theory  of  Communism, 
labor  proper,  i.  e.,  the  rank  and  file  of  economic  pro- 
ducers, constitutes  the  most  important  determining 
factor  in  the  productive  forces  of  a  country,  the  second 
place  in  the  scale  of  importance  is  assigned  to  man- 
agement, i.  e.,  the  highly  specialized  and  trained  direct- 
ing personnel.  In  the  second  stage  of  the  movement, 
when  Communism  proper  is  achieved,  the  two  factors 
are  expected  to  be  merged  into  one.  But  until  that 
stage  is  reached,  during  the  transitional  period,  man- 
agement continues  to  play  a  role  of  its  own,  and,  as 
things  have  developed  in  Russia,  it  is  the  second  funda- 
mental human  element  in  the  situation  which  the  Soviet 
economic  regime  faces. 

The  problem  of  dealing  with  the  question  of  man- 
agement and  of  its  personnel  has  been  rendered  particu- 
larly difficult  for  the  Soviet  regime  by  two  factors. 
In  the  first  place,  the  technical  and  directing  personnel 
of  industry  and  trade  can  scarcely  be  squeezed  into 
the  hard  and  fast  classifications  of  the  class  theory:  it 
is  neither  proletarian,  nor  bourgeois,  in  the  strict  sense 
of  those  terms.  And  in  the  second  place,  the  absence 
of  a  more  or  less  definite  economic  program  at  the  be- 

200 


MANAGEMENT  201 

ginning  of  the  regime  served  to  complicate  and  tangle 
up  any  notions  on  management  that  could  be  enter- 
tained even  in  a  general  way  on  the  basis  of  the  theory. 

During  the  first  few  months  of  the  Soviet  regime,  the 
question  of  the  attitude  towards  the  personnel  of  in- 
dustrial management  was  solved  in  a  very  simple  fash- 
ion. For  purposes  of  propaganda  it  was  classed  with 
the  bourgeoisie,  and  subjected  to  the  same  sort  of  per- 
secution. Its  response  to  this  prosecution  and  to  the 
spirit  which  was  back  of  the  persecution  was  refusal 
to  perform  its  work  even  in  those  places  where  it  was 
permitted  to  remain ;  "sabotage,"  as  this  action  came 
to  be  termed.  The  Soviet  Government  attempted  at 
first  to  break  this  "sabotage"  by  force,  but  failed  en- 
tirely. By  early  spring,  1918,  the  Soviet  Government 
was  already  willing  to  change  its  attitude  toward  the 
specialists  and  the  technical  personnel  of  management 
in  the  sense  of  placing  it  in  a  privileged  position,  par- 
ticularly by  offering  such  specialists  and  managers  very 
high  salaries,  rather  than  keeping  their  pay  on  the 
same  level  as  the  general  wages  of  labor. 

Thus,  it  was  in  the  question  of  management  that  the 
Soviet  regime  made  its  first  really  important  deviation 
from  its  own  general  theory  of  Communism.  And  it 
is  interesting  that  even  to-day,  when  much  experience 
has  already  accrued  and  an  economic  program  has  been 
worked  out,  the  question  of  management  still  continues 
to  be  of  primary  importance  from  the  point  of  view 
of  the  principles  involved ;  it  is  still  the  subject  of  nu- 
merous and  heated  discussions. 


202  ECONOMICS  OF  COMMUNISM 

1.     Administration  by  Committees 

The  distinguishing  feature  of  the  system  of  adminis- 
tration established  by  the  Soviet  regime  when  it  came 
into  power  was  the  introduction  of  the  collegiate  prin- 
ciple throughout  the  whole  system.  Wherever  there 
was  an  individual  administrator  before,  a  group,  called 
a  collegium  or  a  committee,  would  be  put  in  charge.* 
This  affected  every  governmental  activity  under  the 
Soviet  regime. 

From  the  point  of  view  of  historic  precedent,  the 
Soviet  regime  did  not  originate  anything  new  by  intro- 
ducing the  collegiate  principle  of  administration.  The 
French  Revolution  had  done  it  before,  and  the  financial 
difficulties  resulting  from  the  consequent  increase  of  of- 
ficialdom was  one  of  the  most  serious  complications 
that  Napoleon  had  to  face.  The  republican  period  of 
the  Russian  Revolution,  under  the  Provisional  Gov- 
ernment, also  introduced  this  principle  to  some  extent. 
But  it  was  the  Soviet  Government  that  elaborated  the 
principle  into  an  all-pervading  and  all-embracing  sys- 
tem, and  elevated  it  to  the  height  of  the  "true  expres- 
sion of  democracy  in  administration."  That  the  Soviet 
leadership  to-day  has  already  given  up  definitely  this 
conception  of  the  coUegiate  principle  and  has  begun 
very  earnestly  to  root  out  many  of  the  forms  which  it 
has  taken  in  actual  application,  is  merely  another  com- 
mentary on  the  manner  in  which  the  Soviet  regime 
regarded  historic  experience  generally  during  the  pe- 
riod following  its  accession  to  power. 

*  We  shall  uae  these  terms,  "collegium"  and  "committee,"  inter- 
changeably. 


MANAGEMENT  203 

In  the  management  of  industry,  and  in  all  economic 
management  generally,  the  same  principle  of  collegiate 
administration  was  also  carried  out.  This  proceeded 
both  from  the  top  and  from  the  bottom.  When  the 
factory  committees  took  over  the  management  of  in- 
dustrial enterprises  during  the  period  of  labor  control, 
it  was  only  natural,  of  course,  that  the  principle  of 
management  that  should  have  been  introduced  was 
the  collegiate  one.  A  managing  gi'oup  appeared  now 
in  the  place  of  the  individual  manager.  The  system 
was  carried  out  all  the  way  down,  to  the  very  smallest 
ramifications  of  industrial  coordination  expressed  in 
management.  When  nationalization  began  to  be  in- 
troduced, the  apparatus  worked  out  for  it  at  the  top 
was  a  part  of  tbe  whole  Soviet  system  of  government 
and  was  built  on  the  same  fundamental  principles  as 
the  Government  itself.  The  Supreme  Council  of  Na- 
tional Economy,  its  various  "glavki"  and  "centers," 
the  local  councils  of  national  economy,  were  all  built 
upon  the  system  of  collegiate  administration.  And  as 
the  control  of  the  separate  enterprises  was  taken  over  by 
these  organs  of  nationalized  economic  administration, 
as  factory  managements,  and  regional  management, 
and  "kust"  managements  began  to  be  built  up,  their 
construction,  naturally,  conformed  with  the  general 
system. 

The  tremendous  growth  of  the  officialdom  in  the  po- 
litical administration  of  Soviet  Russia  was  duplicated 
by  an  even  greater  growth  of  the  managing  personnel 
in  the  economic  administration.  Moreover,  both  in  the 
political  and  the  economic  administration  of  Soviet 
Russia,  there  was  at  the  beginning  an  utter  lack  of 


204  ECONOMICS  OF  COMMUNISM 

coordination,  which  resulted  in  parallelism  of  work. 
Every  Commissariat  dealing  with  internal  affairs  main- 
tains its  own  local  organs,  rather  than  its  representa- 
tives. These  local  organs  extend  their  activities  over 
many  phases  of  life  and  usually  come  in  contact,  or  more 
often  into  a  clash,  with  local  organs  of  other  Commis- 
sariats and  departments.  For  example,  the  Commis- 
sariats of  Agriculture  and  of  Supplies  have  identical 
duties  in  the  work  of  obtaining  food.  For  the  per- 
formance of  these  duties,  the  two  Commissariats  main- 
tain a  local  organ  each,  which  receive  different  instruc- 
tions from  the  center  and  usually  clash.  In  the  con- 
trol of  industry,  the  local  councils  of  national  economy, 
the  "glavki"  and  the  "centers"  in  Moscow,  and  the  local 
Soviets  often  all  have  similar  duties  to  perform.  The 
confusion  and  the  parallelism  of  work  that  results  from 
such  a  state  of  affairs  is  easy  enough  to  imagine. 

All  this  is  now  thoroughly  realized  by  the  Soviet 
leaders.  In  their  statements  on  the  results  of  the  gen- 
eral application  of  the  principle  of  collegiate  adminis- 
tration and  management,  as  we  shall  have  occasion  to 
see  below,  they  are  very  outspoken.  And  they  are 
taking  numerous  measures  to  overcome  the  difficulties 
which  have  resulted  from  the  manner  in  which  their 
original  system  has  been  carried  out ;  although  they  have 
not,  as  yet,  broken  definitely  with  all  the  implications 
of  the  original  principle. 

In  December,  1919,  an  interesting  decree  was  passed 
by  the  All-Eussian  Central  Executive  Committee,  en- 
titled, ''Measures  for  the  Simplification  of  the  Soviet 
Authority."  *     By  this  decree  a  large  number  of  com- 

*  Petrograd  Pravda,  December  31,  1919. 


MANAGEMENT  205 

mittees  or  collegiiims  in  various  departments  of  po- 
litical and  economic  administration  were  abolished; 
many  were  reduced  in  membership;  many  merged  to- 
gether. In  some  instances  even  individual  adminis- 
tration was  introduced. 

All  the  Commissariats  and  Executive  Committees 
were  directed  by  this  decree  to  abolish  all  sections  and 
institutions,  whose  work  is  not  absolutely  essential ;  to 
abolish  parallel  organizations  and  local  representations, 
wherever  possible;  and  in  all  cases  v/here  feasible,  to 
entrust  special  tasks  to  individuals  under  their  indi- 
vidual responsibility.  A  number  of  other  measures, 
looking  toward  the  reduction  of  the  officialdom,  were 
provided  by  this  decree. 

In  the  work  of  economic  administration,  the  follow- 
ing measures  were  prescribed:  All  '^collegia"  of 
"glavki"  and  '^'centers"  were  ordered  to  reduce  their 
membership  to  3  or  5  members,  instead  of  5  or  7,  as 
before;  the  "glavki"  or  "centers"  of  various  branches  of 
affiliated  industry  were  instructed  to  unite  into  single 
"glavki"  or  "centers"  for  the  whole  industry,  which 
should  be  directed  by  a  single  collegium.  For  local 
councils  of  national  economy,  it  was  ordered  that  in 
each  council  the  collegia  of  the  various  sections  should 
be  abolished  and  the  direction  of  all  the  affairs  of  the 
council  be  concentrated  in  the  hands  of  a  prsesidium, 
consisting  of  not  more  than  three  members.  All  local 
organizations  of  the  "glavki"  and  the  "centers"  of  the 
Supreme  Council  of  National  Economy,  hitherto  main- 
tained by  each,  independently  of  the  local  councils, 
were  ordered  to  be  merged  with  the  latter. 

These  measures  were  followed  several  months  later 


206        •      ECONOMICS  OF  COMMUNISM 

by  still  more  far-reaching  changes  in  the  management 
of  individual  enterprises,  of  which  we  shall  speak  in 
detail  in  another  part  of  this  chapter. 

The  growth  of  the  officialdom,  in  the  economic  and 
political  administration  of  the  country,  may  he  seen 
from  the  following  figures,  indicating  the  status  of 
the  population  of  Petrograd.  In  July,  1920,  the  total 
adult  population  of  Petrograd  was  estimated  at  5G2,- 
404,  divided  into  five  groups.  The  first  gi-oup  com- 
prised the  workmen,  the  actual  producers  in  the 
Communist  sense;  it  numbered  253,340,  or  less  than 
one-half  of  the  total.  The  next  group  comprised  the 
govermnent  employees;  it  numbered  142,  912,  or  over 
one-quarter  of  the  whole  adult  population.  The  next 
group  comprised  soldiers  and  sailors,  of  whom  there 
were  113,207.  The  other  two  groups  consisted  of  uni- 
versity students  and  of  housewives.*  Thus  one  out  of 
every  four  adults  in  Petrograd  is  a  government  of- 
ficial; one  out  of  every  two  adults  in  Petrograd  is 
either  a  government  official  or  a  soldier. 

It  must  be  borne  in  mind  that  Petrogi*ad  is  not  the 
capital  of  the  country.  Its  officialdom  is  not  national, 
but  local  in  character.  The  situation  in  Moscow  in  this 
respect  is  very  much  worse. 

And  when  we  come  to  economic  management,  the 
situation  which  exists  there  may  be  seen  from  the  fol- 
lowing example.  At  the  Briansk  Metallurgical  Works, 
the  second  largest  in  the  "Gomza"  group,  in  1916  there 
were  1G,132  workmen  and  1,548  members  of  the  tech- 

•  G.  Zlnoviev's  article  on  Petrograd  elections,  Moscow  Pravda,  July 
6,    1920. 


MANAGEMENT  207 

nical  and  managing  personnel.  At  the  beginning  of 
1920,  the  number  of  workmen  had  decreased  to  T,T18, 
while  the  number  of  the  other  personnel  was  1,148.* 
In  other  words,  in  1916  for  every  member  of  the  tech- 
nical and  managing  personnel  there  were  ten  workmen, 
while  in  1920  there  were  only  seven. 

What  this  state  of  affairs  means  from  the  fiscal 
point  of  view  in  political  administration  and  from  the 
point  of  view  of  overhead  expenses  in  the  management 
of  industries  is  quite  apparent. 

2.     " GlavTcokratia" :  Inefficiency  in  Production 

This  condition  of  affairs,  particularly  from  the  point 
of  view  of  economic  management,  has  been  very  aptly 
characterized  by  Trotsky  as  "glavkokratia,"  which  was 
a  term  he  used  in  his  report  on  the  militarization  of  la- 
bor at  the  Ninth  Congress  of  the  Communist  Party.  The 
"glavki"  of  the  Supreme  Council  of  National  Economy 
and  their  various  subdivisions  have  now  taken  the  place 
of  the  traditional  governmental  ''bureaus,"  which  had 
given  rise  to  that  much  used  word,  "bureaucracy,"  es- 
pecially popular  in  Russia  under  its  Russian  form, 
"burokratia."  The  word  "glavkokratia"  is  the  Soviet 
counterpart  of  what  "burokratia"  stood  for  under  the 
Imperial  regime.  Trotsky's  description  of  "glavkok- 
ratia," given  in  the  same  report,  is  the  universal  rule 
of  "red  tape"  at  every  factory  and  an  utter  confusion 
due  to  delays  which  are  caused  by  the  collegiate  execu- 
tion of  matters  requiring  immediate  attention  and  the 

•  Ekonomicheskaya  Zhisrij  March  7,  1920. 


208  ECONOMICS  OF  COMMUNISM 

frequently  contradictory  orders  and  instructions  from 
the  center  and  from  special  commissaries.  If  we  accept 
this  description,  the  analogy  between  the  two  systems 
will  become  quite  apparent. 

We  have  already  seen  in  several  concrete  instances  to 
what  this  "glavkokratia"  and  the  resulting  lack  of  coor- 
dination in  the  work  of  economic  administration  lead. 
The  failure  on  the  part  of  the  various  departments  to 
make  use  of  the  shipping  facilities  and  the  cargo  space 
provided  for  them  according  to  their  request,  of  which 
we  spoke  above,  is  a  striking  instance  of  this  lack  of  co- 
ordination. The  inability  on  the  part  of  the  Government 
to  provide  the  cities  and  the  industrial  centers  with  the 
necessary  amounts  of  foodstuffs  even  in  those  districts 
where  transportation  does  not  play  any  part  in  the  mat- 
ter, is  another  striking  instance  of  this.  Let  us  con- 
sider this  second  instance  in  somewhat  greater  detail, 
for  the  question  of  food  supply  is,  for  the  time  being, 
the  cnix  around  which  everything  revolves. 

According  to  the  data  published  by  the  People's  Com- 
missariat of  Supplies,  the  amount  of  foodstuffs  actu- 
ally gathered  by  the  various  governmental  agencies  from 
August,  1919,  to  January,  1920,  was  about  eighty  mil- 
lion pouds.  The  amount  expected  was  about  three 
hundred  million  pouds;  thus  only  a  quarter  of  the 
amount  expected  was  actually  gathered  and  supposedly 
prepared  for  shipment.  But  even  this  was  not  the 
greatest  of  the  difficulties.  The  amount  actually  shipped 
was  eleven  million  pouds.  In  other  words,  the  ship- 
ments constituted  one-seventh  of  the  amounts  actually 
gathered,  or  less  than  four  per  cent,  of  the  amounts  ex- 


MANAGEMENT  209 

pected.*  Of  course,  the  difficulties  of  transportation 
are  partly  to  blame  for  this.  But  in  view  of  the  reports 
concerning  the  failure  of  the  Department  of  Supplies 
to  use  nearly  half  of  the  cargo  space  placed  at  its  dis- 
posal (see  Table  No.  13  in  the  chapter  on  Transpor- 
tation), it  is  obvious  that  the  blame  for  the  state  of 
affairs  described  here  rests  with  the  system  of  "glavko- 
kratia"  and  the  lack  of  coordination  in  the  work  of  the 
various  departments  of  economic  administration. 

Another  interesting  instance  of  this  lack  of  coopera- 
tion is  furnished  by  the  textile  industry.  In  sum- 
marizing the  work  of  the  cotton  goods  branch  of  this 
industry,  an  official  report  f  makes  the  following  four 
points : 

1.  The  spinning  of  cotton  was  handicapped  by  the 
shortage  of  raw  cotton,  which  was  due  both  to  actual 
insufficiency  of  supply  and  to  lack  of  efficiency  in  the 
matter  of  distributing  the  stocks  on  hand.  At  no  time, 
even  when  the  shortage  was  greatest  and  the  need  at  the 
factories  most  acute,  did  the  stocks  fall  below  300,000 
pouds;  but  they  were  at  the  warehouses,  not  at  the 
factories. 

2.  There  usually  were  some  amounts  of  spun  ma- 
terial, but  seldom  at  the  factories  where  such  material 
was  needed.  And  when  delivered,  the  spun  material 
was  often  not  of  the  kind  asked  for  and  needed. 

3.  If  spun  material  was  delivered  and  was  of  the 
right  kind,  many  of  the  factories  where  this  happened 
usually  found  themselves  without  any  fuel. 

4.  When  spun  material  was  on  hand  and  fuel  was 

*  These    figures    are    taken    from    R.    Arsky's    article    on    "Pood    and 
Transportation,"   in   Moscow  Izvestiya,  February   24,    1920. 
t  Ekonomicheskaya    Zhisn,    June    24,    1920. 


210  ECONOMICS  OF  COMMUNISM 

finally  obtained,  in  a  large  number  of  eases  there  would 
be  no  food  supplies  delivered  at  the  factory  and,  con- 
sequently, very  few  workmen  to  do  the  work. 

Largely  as  a  result  of  this  lack  of  coordination,  out 
of  the  319,055  spindles  which  were  operated  in  April, 
1920,  over  90,000  worked  intermittently.* 

There  is  no  statistical  data  available  that  would  show 
what  part  inefficient  management  under  the  system  of 
"glavkokratia"  plays  in  keeping  down  production  even 
below  the  minimums  obtained  by  discounting  the  fac- 
tors we  have  already  considered,  viz.,  transportation, 
fuel,  raw  materials,  and  labor.  But  that  it  plays  a 
part  of  outstanding  importance  is  witnessed  by  the  se^ 
riousness  of  the  measures  adopted  against  it,  particu- 
larly in  the  course  of  the  past  few  months.  In  a  speech 
delivered  at  the  Third  All-Russian  Congress  of  Water 
Transport  Workers,  Lenin  characterized  this  phase  of 
Russia's  economic  situation  as  follows: 

It  is  a  question  of  the  very  existence  of  the  workmen- 
peasant  authority;  the  very  existence  of  Soviet  Russia  is 
now  at  stake.  For  the  existence  of  Soviet  Russia  is  truly 
at  stake,  when  incompetent  men  are  at  the  head  of  manage- 
ment, when  fuel  is  not  delivered  on  time,  when  locomotives 
and  steamers  are  not  repaired. 

This  statement  of  Lenin's  indicates  the  importance 
which  "glavkokratia,"  the  lack  of  coordination  in  the 
work  of  the  various  departments  dealing  with  economic 
management,  and  general  inefficiency  in  matters  con- 
cerned with  the  various  factors  of  production  have  in 

*  Report  in  Ekonomicheskaya  Zhisn,  June  24,  1920.  The  total  num- 
ber of  spindles  operated  in  Russia  before  the  war,  exclusive  of  Poland 
and   Finland,    was   7,284,572. 


MANAGEMENT  211 

the  industrial  life  of  Soviet  Eiissia.  And  a  similar 
state  of  affairs  obtains  in  the  distribution  of  manufac- 
tured goods  and  other  articles  of  general  consumption. 

S.     " Spehalyatsia" :  Inefficiency  in  Distribution 

All  distribution,  i.  e.,  the  exchange  of  goods  for 
money  and  ultimately  for  other  goods,  is  officially  in 
the  hands  of  the  reorganized  cooperative  system,  acting 
as  a  governmental  institution.  But  in  reality  much  of 
the  exchange  of  goods  is  done  through  the  intermediary 
of  that  peculiar  institution  of  exchange  known  as  "spek- 
ulyatsia."  We  have  already  defined  "spekulyatsia"  as 
trade,  carried  on  in  the  same  manner  as  ordinary  com- 
mercial trade,  but  clandestinely,  since  it  is  for- 
bidden by  the  Government,  and  for  this  reason,  as  well 
as  because  of  the  forcible  interruption  in  the  operation 
of  the  law  of  supply  and  demand,  on  an  outrageously 
profiteering  basis.  We  have  already  seen  what  an  over- 
whelmingly important  part  this  clandestine  trade  plays 
in  the  life  of  the  people :  without  it,  the  whole  industrial 
population  of  the  cities  would  literally  starve  to  death, 
since  the  governmental  agencies  supply  less  than  one- 
quarter  of  the  essential  minimum  of  subsistence,  the 
rest  coming  from  the  ''spekulyatsia"  markets. 

But  the  question  arises,  Where  do  these  markets  of 
''free"  trade  obtain  their  stocks  of  goods?  Both  man- 
ufactured goods  and  foodstuffs  are  sold  there.  Where 
do  the  manufactured  goods  come  from,  if  all  industrial 
production  is  presumably  controlled  by  the  Govern- 
ment? The  foodstuffs  obviously  come  from  the  villages, 
but  how  are  they  brought  to  the  cities? 


213  ECONOMICS  OF  COMMUNISM 

In  its  inability  to  organize  distribution  in  such  a  way 
as  to  be  able  really  to  control  the  whole  economic  output 
of  the  country  lies  the  first  element  of  the  inefficiency 
of  the  Soviet  regime  in  distribution.  In  its  helpless- 
ness to  stamp  out  such  a  glaring  contradiction  to  all 
of  its  principles  as  the  universally  existent  ''speku- 
lyatsia"  lies  another  element  of  inefficiency.  And  the 
two,  of  course,  are  closely  bound  together. 

In  1919,  a  special  Interdepartmental  Commission  was 
organized  by  the  All-Russian  Extraordinary  Commis- 
sion, which  is  charged  with  the  duty  of  combating 
"spekulyatsia,"  as  well  as  the  counter-revolutionary 
activities,  for  the  purpose  of  making  a  thorough  inves- 
tigation of  the  first  phenomenon.  By  February,  1920, 
the  Interdepartmental  Commission  had  completed  its 
study  of  the  situation,  particularly  in  Moscow,  and  had 
an  exhaustive  picture  of  the  conditions  as  they  existed. 
In  announcing  the  publication  of  this  report,  the  Eko- 
noTYiicheskaya,  ZJiisn  *  made  the  following  statement  of 
conditions  generally : 

One  of  the  most  striking  contradictions  of  our  whole  eco- 
nomic reality  is  the  contrast  betv/een  the  gaping  emptiness 
of  the  Soviet  stores,  with  their  signs,  reading,  "The  Dry- 
Goods  Store  of  the  Moscow  Soviet,"  "The  Book  Shop,"  "The 
Leather  Goods  Shop,"  and  the  busy  activities  of  the  Suk- 
haryovka,  the  Smolensk  Market,  the  Okhotny  Eow,  and  the 
other  centers  of  the  "spekulyatsia"  market. 

But  how  do  these  goods,  which  ought  to  be  in  the 
Soviet  stoi-es,  get  to  all  these  centers  of  "free"  trade? 
All  the  stocks  of  manufactured  goods  which  might  have 

*  February    18,    1920. 


MANAGEMENT  313 

been  hidden  at  the  time  of  the  Bolshevist  revolution, 
could  not  have  lasted  for  over  two  years.  They  have, 
no  doubt,  been  consumed  long  ago.  The  Ekonomiches- 
haya  Zhisn  asks  the  question  as  to  the  source  of  supply 
of  these  markets,  and  then  gives  the  answer  on  the  basis 
of  the  investigation  conducted  by  the  Interdepartmental 
Commission : 

We  assert  that  the  abundance  of  goods  of  all  kinds  which 
exists  now  on  the  "spekulyatsia"  market  has  for  its  source 
only  the  warehouses  of  Soviet  Russia,  from  which  these  goods 
are  supplied  there  in  a  criminal  fashion.  It  is  we,  our- 
selves, who  feed  Sukharyovka  with  the  goods  it  sells  and 
render  useless  our  struggle  against  the  village  "kulaki"  who 
supply  foodstuffs  to  the  Sukharyovka  in  exchange  for  our 
own  cloth,  metal  goods,  etc. 

This  disappearance  of  the  manufactured  goods  takes 
place  at  every  stage  of  distribution:  at  the  factories, 
in  the  course  of  production  itself,  of  storing  and  of  de- 
livering the  products ;  in  the  warehouses,  in  the  course 
of  deliveries  to  and  from  them,  as  well  as  during  the 
time  the  goods  are  stored  there ;  in  transportation,  when 
both  raw  materials  and  finished  products  disappear; 
in  the  process  of  delivering  the  goods  to  the  organs  of 
distribution,  as  well  as  in  the  distribution  to  the  con- 
sumer proper. 

The  announcement  in  Ekonomicheskaya  Zhisn,  in 
which  all  this  was  stated,  promised  that  the  documen- 
tary evidence,  obtained  in  the  course  of  the  investi- 
gation by  the  Interdepartmental  Commission  and  cover- 
ing all  these  points,  would  be  published.  These  docu- 
ments, however,  did  not  appear.  For  some  reason  or 
other,  they  were  suppressed,  but  the  statements  pub- 


214  ECONOMICS  OF  COMMUNISM 

lished  in  the  announcement  shed  a  most  interesting 
light  on  the  nature  of  the  findings. 

It  is  obvious,  then,  that  the  goods  sold  on  the  "speku- 
lyatsia"  markets  are  stolen  from  the  various  govern- 
mental agencies  at  the  different  stages  of  the  process 
of  distribution.     What  is  the  extent  of  this  looting? 

No  statistical  data  is  available  for  the  extent  of  this 
process  at  the  factories  and  the  mills  themselves.  For 
thefts  in  the  course  of  transportation  we  have  the  fol- 
lov^ing  figures:  in  1918,  the  amount  of  goods  stolen 
from  the  railroad  stations  constituted  six  per  cent,  of 
the  total  cargoes;  in  1919,  it  was  ten  per  cent.*  In 
1920,  the  percentage  rose  still  higher,  and  in  order 
to  combat  this,  a  special  order  was  issued  by  Trotsky, 
as  the  head  of  the  Commissariat  of  Ways  of  Communi- 
cation, making  theft  on  the  railroad  lines  a  capital  of- 
fense, punishable  by  death. 

As  regards  the  warehouses,  while  the  documentary 
evidence  of  the  Interdepartmental  Commission  is  not 
available,  the  results  of  another  investigation  of  similar 
nature  have  been  published.f  In  June,  1920,  a  dele- 
gation of  workmen  from  the  factories  and  foundries 
of  Moscow  conducted  an  investigation  of  the  warehouses 
located  in  the  capital.  One  thousand,  five  hundred  and 
sixty-four  warehouses  were  examined.  The  general 
verdict  on  the  situation  was  that  ''there  is  universally 
utter  lack  of  economy  on  the  part  of  the  'glavki'  and 
the  'centers'  in  the  management  of  the  warehouses 
under  their  control,  and  also  criminal  'spekulyatsia' 
in  practically  all  the  warehouses."     It  is  charged  that 

*  Ekonomicheskaya  Zhisn,   July  3,  1920. 
t  Ibid.,   June  26,  1920. 


MANAGEMENT  215 

the  "glavki"  and  the  "centers"  not  only  "do  not  know 
what  goods  and  in  what  amounts  are  kept  in  the  ware- 
houses under  their  control,  but  are  actually  ignorant 
even  of  the  number  of  such  warehouses."  The  follow- 
ing specific  findings  were  announced : 

Large  amounts  of  manufactured  goods,  footwear,  metals, 
building  materials,  tools,  articles  of  military  equipment,  etc., 
were  found  in  the  warehouses.  In  one  place  there  are  600,000 
pouds  of  soap.  Scarcely  a  warehouse  has  an  inventory  of 
what  it  contains.  The  system  of  guarding  the  warehouses 
is  very  loose,  and  systematic  looting  is  very  common.  Those 
in  charge  of  the  warehouses  are  often  unfitted  for  their  jobs. 
There  is  no  system  or  order  in  the  processes  of  storing,  re- 
ceiving and  delivering  the  goods.  Proper  control  and  super- 
vision over  the  employees  and  the  loading  crews  is  lacking 
almost  everywhere. 

A  similar  description  of  the  state  of  affairs  at  the 
warehouses  is  found  in  an  article  of  a  somewhat  later 
date.*  The  author  of  this  article  attempts  to  explain 
why  so  much  looting  of  the  warehouses  is  being  done 
and  on  such  a  systematic  and  extensive  scale.  In  a 
tone  that  is  so  characteristic  of  the  Soviet  leaders  he 
says: 

The  irresistible  stimulus  to  theft  and  looting  is  the  lack  of 
proper  provision  for  the  employees  at  the  warehouses.  The 
maximum  wages  of  such  employees  are  3,000  roubles  per 
month;  the  minimum,  2,100  roubles.  The  food  ration  re- 
ceived by  them  is  the  ordinary  amount.  It  is  clear  that, 
barring  a  few  exceptions,  all  those  who  undertake  such  dilfi- 
cult  and  responsible  work  for  so  small  a  remuneration,  do 
so  in  the  expectation  of  stealing.     First,  they  steal  to  satisfy 

*  A.  D.  Shcherbakov,  article  oa  "The  Soviet  Warehouses,"  Ekonomi- 
eheakaya  Zhisn,  August  3,   1920. 


216  ECONOMICS  OF  COMMUNISM 

their  own  needs.     Later  on,  for  "the  appetite  conies  with  the 
eating,"  they  begin  to  steal  for  purposes  of  "spekulyatsia." 

It  is  in  this  manner,  then,  that  the  manufactured 
goods,  with  which,  as  we  are  authoritatively  informed 
by  the  Ekonomicheskaya  Zhisn,  the  "spekulyatsia"  mar- 
kets are  so  amply  supplied  at  the  expense  of  the  stores 
maintained  by  the  Soviet  Government  itself,  get  to 
these  centers  of  "free"  trade.  But  how  do  the  food 
stuffs  get  there  ? 

The  Government  maintains  a  monopoly  of  the  sale  of 
all  food  products.  This  monopoly,  however,  is  impos- 
sible to  enforce  in  the  villages,  where  large  amounts  of 
foodstuffs  change  hands  secretly.  These  foodstuffs  are 
then  carried  to  the  cities  in  bags,  by  a  special  class 
of  middlemen  known  as  "bagmen,"  i.  a,  those  who 
carry  sacks  of  flour,  or  vegetables,  etc.,  for  sale  in  the 
cities.  They  have  developed  what  appears  to  be  mar- 
velous technique  in  avoiding  arrest  on  the  railroad 
trains  while  in  transit.  But  besides  the  regular  rail- 
road guards,  the  Soviet  Government  places  special 
"guard  detachments"  at  all  railroad  stations  in  the 
vicinity  of  larger  cities,  charged  especially  with 
the  duty  of  intercepting  the  "bagmen."  The  manner 
in  which  these  "guard  detachments"  do  their  duty  may 
be  seen  from  the  following  description: 

The  "guard  detachments,"  intended  for  a  struggle  against 
the  profiteering  "bagmen,"  have  become  in  the  majority  of 
cases  merely  an  organization  for  assisting  "spekulyatsia." 
.  .  .  For  a  bribe  in  money,  alcohol,  or  substitute  liquor, 
they  not  only  permit  the  "speculators"  to  bring  in  their 
products,  but  even  help  them.  At  railroad  stations  one  can 
often  see  these  "guardians  of  the  law"  carrying  bags  with 


MANAGEMENT  217 

flour  or  other  food  products  on  their  shoulders,  pushing  the 
passengers  aside,  and  followed  by  the  "speculators"  in  whose 
pay  they  are  and  whose  contraband  they  carry* 

The  "guard  detachments"  are  supposed  also  to  assist 
those  workmen  who  are  detailed  by  the  authorities  or 
by  their  organizations  to  the  rural  districts  to  obtain 
foodstuffs.  But  according  to  the  author  of  the  article, 
the  "guard  detachments"  in  many  cases,  "not  content 
with  the  bribes  which  they  receive  from  the  enterprising 
'speculators',  rob  the  workmen  when  they  carry  gi-ain 
and  other  food  products  by  peiinission  of  the  authori- 
ties." As  a  general  thing,  wherever  "guard  detach- 
ments" are  stationed,  the  "bagmen"  and  the  "specula- 
tors" usually  "find  things  very  easy  for  them,  but  the 
workmen  traveling  with  permits  are  robbed  of  every- 
thing they  have."  Unless,  of  course,  they  too  follow 
suit  and  emulate  the  enterprising  provenders  of  the 
"spekulyatsia"  markets  in  the  art  of  bribing. 

When  such  is  the  state  of  affairs,  it  is  easy  enough 
to  see  how  the  forbidden  goods  and  foodstuffs  find 
their  way  to  the  centers  of  the  "spekulyatsia"  trade. 

Jf.     Private  Initiative  in  Disguise 

It  is  obvious,  of  course,  that  this  practice  of  "speku- 
lyatsia" could  gi-ow  up  only  on  the  basis  of  an  exercise 

♦  G.  Evdokimov's  article,  "Working  for  the  Counter-Revolution," 
Petrograd  Pravda,  December  26.  1919.  Continuing  his  description,  the 
author  of  the  article  says : 

"Eye  witnesses  tell  of  dreadful  things  happening,  for  example,  at 
the  station  of  Luga  (near  Petrograd).  In  the  barracks  of  the  'guard 
detachment,'  flour  and  meat  are  scattered  all  over  the  floor.  There  is 
a  smell  of  alcohol  all  around.  ...  A  railroad  workman  told  me  that  in 
order  to  bring  a  bag  of  flour  for  which  he  had  a  permit  from  Vitebsk 
to  Petrograd,  past  four  'guard  detachments,'  all  that  was  necessary 
for  him  was  to  have  four  bottles  of  liquor.  The  bottles  had  better 
effect  than  any  order  signed  by  the  Council  of  People's  Commissaries." 


218  ECONOMICS  OF  COMMUNISM 

of  some  form  of  private  initiative  in  the  processes  of 
production  and  distribution. 

The  Soviet  press  devotes  considerable  attention  to  this 
question,  but  nowhere  is  there  to  be  found  a  more  frank 
discussion  of  it  than  in  an  article  which  appeared  in 
the  official  organ  of  the  Russian  Communist  Party  over 
the  signature  of  a  rather  prominent  writer  on  economic 
questions.*  The  article  is  devoted  to  the  part  which 
the  process  of  ^'spekulyatsia"  plays  in  the  Soviet  insti- 
tutions of  production,  distribution,  inspection,  and 
control. 

The  author  of  the  article  makes  the  point  that  many 
of  the  nationalized  and  state-owned  factories  and  foun- 
dries ''are  either  at  a  standstill  or  else  are  barely  func- 
tioning at  all" ;  while  at  the  same  time,  privately-owned 
enterprises,  ''masquerading  under  the  gaiise  of  'kustar' 
and  cooperative  enterprises,  are  working  and  flourish- 
ing." And  the  owners  of  these  disguised  private  en- 
terprises manage  to  sell  most  of  their  products  at  the 
"spekulyatsia"  markets  at  very  high  prices. 

As  we  pointed  out  in  the  chapter  on  Nationalized 
Production,  there  are  two  important  classes  of  non- 
nationalized  enterprises,  viz.,  those  controlled  and 
financed  by  the  Soviet  Government,  and  those  that  exist 
without  any  control.  The  article  we  are  quoting  dis- 
cusses the  situation  for  both  of  these  classes. 

The  private  enterprises  controlled  by  the  state  receive 
their  stocks  of  raw  materials  from  the  Soviet  institu- 
tions that  control  the  distribution  of  these  stocks;  they 
are  expected  to  sell  their  products  to  the  Government 

•  B.  Prumkin,  "The  Roots  of  the  'Spekulyatsia,' "  Moscow  Pravda, 
February  4,  1921. 


MANAGEMENT  219 

In  the  transaction,  the  owners  of  these  enterprises  re^ 
ceive  a  certain  margin  of  profit.  But  this  margin  is 
regarded  by  them  as  utterly  inadequate,  and  other  means 
are  sought  to  increase  it.  The  "spekulyatsia"  trade 
offers  such  means. 

But  how  can  this  disguised  private  "entrepreneur" 
succeed  in  operating  his  enterprise  when  the  state- 
owned  works  cannot  ?  The  answer  is  that  by  pay- 
ing bribes,  the  private  "entrepreneur"  finds  it  possible 
to  obtain  orders  from  the  Government,  as  well  as  the 
stocks  of  materials  and  of  fuel  that  he  needs  for  the  fill- 
ing of  these  orders.  The  process  of  this  bribe-giving 
is  described  as  follows : 

The  private  "entrepreneur"  has  to  pay  bribes  to  everybody 
in  the  Soviet  institutions.  He  pays  for  the  very  fact  of 
receiving  the  order;  for  the  drawing  up  of  the  agTeement; 
for  the  estimates;  for  the  right  to  receive  cash  payment; 
for  the  right  to  obtain  raw  materials  and  fuel ;  and  to  count- 
less controlling  and  receiving  commissions.  If  his  papers 
have  to  pass  through  several  stages  or  even  institutions,  the 
same  thing  takes  place  in  all  of  them.  Some  officials  take 
bribes  and  in  exchange  for  that  really  violate  laws;  in  the 
terminology  of  those  who  take  bribes  that  is  called  a  'le- 
gitimate" bribe.  Others  receive  a  bribe  merely  for  taking  a 
document  to  their  superiors  for  signature.  Some  take  bribes 
for  not  interfering.  Still  others  take  bribes  simply  because 
they  can  get  them;  such  officials  are  called  plain  swindlers. 
Every  investigation,  every  inspection  really  turns  out  to  be 
another  bribe  assessment.  And  not  to  give  bribes  is  im- 
possible. Reasons  will  alwavs  be  found  for  dragging  the 
case  indefinitely,  far  refusing  to  furnish  the  materials  re- 
quired, or  for  furnishing  materials  that  are  not  of  the  proper 
quality.* 

♦  B.   Frumkin,  loc.   cit. 


220  ECONOMICS  OF  COMMUNISM 

The  officials  themselves  explain  their  bribe-taking 
on  the  ground  that  the  Government  does  not  pay  them 
enough  to  live  on.  The  "entrepreneur"  justifies  his 
bribe-giving  on  the  ground  that  he  can  always  make 
a  large  enough  margin  of  profit,  since  he  has  an  oppor- 
tunity to  sell  at  the  "spekulyatsia"  market,  not  only  a 
part  of  his  finished  product,  but  also  a  part  of  the  raw 
materials  he  obtains  from  the  Government.  Moreover, 
by  pa^dng  bribes,  he  makes  "friends"  among  officials 
and  can  always  count  on  them  for  "favors"  in  the  eva- 
sion of  such  laws  as  those  concerned  with  universal 
labor,  service,  etc. 

The  privately-owned  enterprises  which  are  not  con- 
trolled by  the  state  (and  they  constitute  "a  vast  major- 
ity of  the  small  enterprises,"  as  Mr.  Frumkin  assures 
us),  both  get  their  raw  materials  and  sell  their  products 
in  the  "spekulyatsia"  market.  How  do  the  stocks  of 
raw  materials  get  to  these  markets  ?  Mr.  Frumkin 
has  the  following  explanation: 

A  Soviet  institution  sends  in  a  request  for  some  materials 
to  another  organ  of  distribution,  and  in  many  cases  such  a 
request  is  fictitious  and  forged.  But  all  this  takes  place  as  a 
result  of  an  understanding  with  the  officials  of  the  institu- 
tion by  which  the  materials  are  furnished,  and  the  further 
development  of  the  transaction  needs  no  elaboration.  More- 
over, there  are  always  in  the  Soviet  warehouses  certain 
amounts  of  goods,  concealed  from  inspection  and  control, 
again  as  a  result  of  an  understanding  with  the  comrades  who 
are  working  in  these  institutions.  Figures  in  the  reports  con- 
cerning outgoing  materials  are  often  exaggerated.  Inven- 
tories at  the  time  of  the  delivery  of  requisitioned  materials 
are  falsified.  Fictitious  thefts  are  reported,  etc.  Finally, 
when  factories  are  nationalized  and  the  stocks  on  hand  are 
taken   over  by   the   Soviet  institutions,   the  inventories   are 


MANAGEMENT  221 

often  falsified  and  certain  amounts  are  concealed  from  in- 
spection. 

The  conclusion  which  Mr.  Friimkin  draws  from  all 
this  is  expressed  in  the  following  significant  words : 

Thus  the  whole  energy  of  the  officials  of  these  state  insti- 
tutions is  directed  toward  helping  the  privately-owned  enter- 
prises.    And  what  can  remain  for  state-o^vned  enterprises? 

Mr.  Frumkin  proposes  a  number  of  changes,  look- 
ing toward  an  improvement  of  this  situation.  He  con- 
siders the  fact  that  the  specialists  and  managers  trained, 
naturally,  before  the  introduction  of  Communism,  are 
so  prominent  in  the  management  of  economic  affairs 
under  the  Soviet  regime  as  a  great  danger  to  the  regime, 
especially  when  they  are  left  in  the  same  place  too 
long.  So  he  suggests  a  complete  redistribution  of  these 
specialists  on  a  national  scale  and  the  introduction  of 
more  stringent  control  over  them.  Moreover,  he  con- 
siders it  necessary  to  impress  upon  all  good  Communists 
that  ''it  is  the  duty  of  each  one  of  them  to  report  all 
cases  of  improper  practices,  paying  no  attention  to  the 
fact  that,  because  of  this,  they  may  be  denounced  as  base 
informers  by  the  specialists  who  may  be  involved." 

The  most  important  of  his  nine  specific  recommenda- 
tions is  concerned  with  the  need  of  giving  up  the  prac- 
tice of  entnisting  any  work  of  production  to  small-scale 
enterprises,  run  on  the  basis  of  profit  by  private  entre- 
preneurs. Here,  however,  he  enters  a  sphere  of  very 
complicated  relationships.  Beginning  with  the  second 
half  of  1919,  there  has  been  a  constant  growth  of  small- 
scale  production,  carried  on  by  private  individuals,  usu- 


223  ECOXOMTCS  OF  COMMUNISM 

ally  in  cooperative  groups.  And  this  growth  was  ac- 
companied by  a  decrease  of  the  output  of  the  state- 
owned  factories.     The  following  Table  illustrates  this: 

Table  No.  1 

Amount  of  Wool  Furnished  hy  the  State  in  1919 
(In  thousands  of  ponds.) 

First  6  mos.         Second  6  mos. 

To  Factories   175.0  73.0 

To  Kustars 77.8  192.8 

On  the  basis  of  these  figures  and  of  similar  material, 
the  author  of  the  article  from  which  this  table  is 
taken,*  makes  the  following  generalization: 

On  the  basis  of  our  profound  economic  disorganization, 
there  is  taking  place  a  contraction  and  weakening  of  fac- 
tory production  and  the  diminution  of  its  significance  for  the 
economic  life  of  the  country. 

Industry  under  these  conditions  is  reverting  to  "kus- 
tar"  or  small-scale,  home  production.  And  coupled 
with  the  new  conditions  of  distribution,  this  results  in 
the  growth  of  the  practice  of  "spekulyatsia." 

There  is  still  another  phase  of  the  situation  and  an- 
other form  of  the  exercise  of  private  initiative  on  a 
very  primitive  scale  in  the  basic  economic  processes. 
So  far  we  have  been  dealing  with  enterprises  which  are 
conducted  more  or  less  openly  on  the  basis  of  private 
ownership.  But  the  ''spekulyatsia"  markets  are  fed 
also  from  another  spring.     It  is  reported  as  a  universal 

*  A.  Bubnov,  "The  Factory  and  the  Kustars,"  Moscow  Pravda, 
August   19,   1920. 


MANAGEMENT  223 

occurrence  that  workmen  employed  in  nationalized  en- 
terprises make  it  a  practice  of  stealing  materials  pro- 
vided for  these  factories,  working  them  over  into  sim- 
ple articles  of  general  consumption  during  working 
hours,  and  with  the  use  of  the  factory  machinery,  and 
then  selling  such  products  for  personal  profit.  This 
is  especially  noticeable  in  the  smaller  centers.  A  writer 
in  tlie  official  organ  of  the  Potrograd  Trade  Unions  * 
makes  the  following  statement : 

Ask  how  many  days  a  man  actually  works  in  a  factory 
and  how  much  time  he  spends  in  making  things  which  he 
sells  personally.  Ask  the  peasants  where  they  get  their  uten- 
sils and  smaller  implements.  The  answer  is  that  these  prod- 
ucts are  exchanged  for  bread,  meat,  butter,  etc.  The  manu- 
facture of  small  articles  of  consumption  out  of  materials 
in  the  state-owned  factones  and  the  sale  of  these  articles 
to  the  peasants  by  the  worl-men  themselves  is  a  common 
occurrence. 

5.     Financial  Chaos 

It  is  curious  that  in  the  domain  of  finance  the  Soviet 
leaders  have  made  no  attempts  to  introduce  new  forms, 
except  on  one  occasion  for  a  specific  purpose. 

The  taxes  fomierly  gathered  from  the  peasantry  are 
now  taken  in  the  form  of  grain  requisitions.  Thus, 
they  have  ceased  to  play  any  part  in  the  fiscal  arrange- 
ments of  the  Soviet  regime.  Industry  and  trade  re- 
main as  the  only  active  sources  of  revenue.  But  in 
this  domain,  the  Soviet  financiers  have  contented  them- 
selves with  the  presci-vation  of  the  old  forms  of  taxa- 
tion. It  is  true  that  the  amounts  expected  and  particu- 
larly the  amounts  actually  received  as  taxes  are  very 

*  p.  Sirotinin,  Petrograd  Makhovik,  February  4,  1921. 


224  ECONOMICS  OF  COMMUNISM 

small  in  comparison  with  the  expenditures,  but  the 
question  nevertheless  presents  interest,  particularly 
since  this  question  of  taxation  affects  directly  the  man- 
agement of  the  industries. 

It  has  now  become  a  truism  that  most  of  the  expendi- 
tures of  the  Soviet  Government  are  covered  by  new 
issues  of  paper  money.  But  it  is  a  matter  of  contro- 
versy as  to  how  large  a  part  of  the  general  expenditures 
is  thus  covered.  The  figures  given  some  time  ago  by 
a  competent  Soviet  economist  *  indicate  that  during  the 
second  half  of  1919,  eighty -nine  per  cent,  of  all  the  ex- 
penses of  the  Soviet  Government  were  covered  by  is- 
sues of  paper  money.  Only  once  during  its  whole  ca- 
reer was  the  Soviet  Government  able  to  show  a  budget 
that  would  not  be  built  entirely  on  issues  of  paper 
money.  That  was  during  the  second  half  of  1918, 
when  a  special  revolutionary  tax  of  ten  billion  roubles 
was  levied,  constituting  incidentally  the  only  original 
financial  measure  ever  undertaken  by  the  Soviet  Gov- 
ernment. As  a  result  of  reading  this  special  tax  into 
the  budget,  the  Government  was  able  to  show  on  its 
credit  side,  a  sum  that  covered  eighty-five  per  cent,  of 
the  expenses.  What  the  actual  budget  was  like,  i.  e., 
what  the  actual  receipts  were,  is  not  known ;  but  the 
reports  available  concerning  the  receipts  of  the  special 
tax  are  scarcely  encouraging. 

The  taxes  in  Soviet  finance  as  in  ordinary  finance 
are  divided  principally  into  three  classes:  direct  taxes, 
indirect  taxes,  and  custom  duties.  The  relative  impor- 
tance of  these  three  forms  of  taxation  during  the  second 
half  of  1919  was  as  follows:  the  indirect  taxes  were 

•  L.  Krassov  in  Ekonomicheskaya  Zhisn,  February  18,  1920. 


MANAGEMENT  225 

expected  to  fiirnisli  64  per  cent,  of  the  total  amount ;  the 
direct  taxes,  30  per  cent. ;  and  the  custom  duties,  6  per 
cent.* 

The  manner  of  levying  the  indirect  tax  is  similar  to 
the  old  system  of  excises.  A  percentage  is  paid  to  the 
Government  Treasury  on  all  the  products  of  the  in- 
dustry controlled  by  the  Supreme  Council  of  ^National 
Economy.  It  is  specified,  however,  in  the  decree  of 
November  21,  1918,  which  established  the  system,  and 
in  the  special  regulations  explaining  the  decree,  issued 
almost  a  year  later,  that  such  a  levy  should  be  made  on 
all  goods,  for  which  the  Supreme  Council  establishes  a 
"fixed"  price,  and  that  the  amounts  due  to  the  Gov- 
ernment should  be  revised  with  every  revision  of  "fixed" 
prices.  Payments  of  this  tax  are  made  by  bank  trans- 
fer of  the  total  sum  for  the  given  period  to  the  Division 
of  Indirect  Taxation.f 

The  State  Treasury  of  the  Soviet  Government  does 
not  seem,  however,  to  profit  very  extensively  through 
the  use  of  this  system.  For  the  year  1919,  the  amount 
estimated  as  due  for  transfer  to  the  Treasury  through 
the  Department  of  Indirect  Taxation  was  3,127,707,- 
840  roubles.  Of  this  amount,  by  January  1,  1920, 
only  193,597,086  roubles,  or  about  6  per  cent.,  were 
actually  transferred.:}:  As  a  result  of  this,  the  Commis- 
sariat of  Finance  is  now  making  an  effort  to  have  this 
system  of  indirect  taxation  entirely  abolished,  and  a  sys- 
tem of  the  transfer  of  a  share  of  the  profits  of  nation- 
alized industry  to  the  Treasury  substituted  for  it. 

The  nationalized  industry  thus  serves  at  best  as  a 

*  Kras30v,   loc.   cit. 

t  Ekonomicheskaya  Zhisn,  January  13,  1920. 

t  Krassov,  loc.  cit. 


226  ECONOMICS  OF  COMMUNISM 

very  poor  source  of  state  revenue.     What  is  the  condi- 
tion of  its  own  finance? 

At  the  beginning  of  1920,  the  Supreme  Council  of 
National  Economy  published  its  budget  for  the  second 
half  of  1919.  The  expenditures  of  the  nationalized  in- 
dustries of  Eussia  for  those  six  months,  exclusive  of 
the  ways  of  communication,  constituted  35,578  million 
roubles.  The  receipts  of  the  various  branches  of  the 
Supreme  Council  are  mentioned  as  not  having  been 
computed.  This  point  is  explained  by  the  fact  that 
the  accounting  system  of  the  Supreme  Council  has  not 
been  organized,  and  it  is  impossible  to  tell  in  terms  of 
monetary  units  how  much  the  nationalized  industry  in 
Soviet  Russia  actually  produces.* 

In  the  Explanatory  Note,  attached  to  the  budget,  this 
fact  of  the  impossibility  of  determining  the  value  of  the 
output  of  the  Supreme  Council  of  National  Economy 
is  mentioned  as  one  of  the  "defects"  of  the  financial 
side  of  the  system.  Another  '^defect,"  mentioned  in  the 
Explanatory  Note,  is  the  tremendous  growth  of  wages 
due  to  increase  of  personnel,  etc.  As  an  illustration 
of  this,  the  following  figures,  given  in  the  budget,  will 
serve  the  purpose.  During  the  first  half  of  1918,  the 
expenditures  for  the  local  organs  of  the  Supreme  Coun- 
cil constituted  4  million  roubles;  during  the  second 
half  of  1918,  they  were  32  million  roubles;  during  the 
first  half  of  1919,  63  million  roubles;  and  during  the 
second  half,  437  million  roubles.  Finally,  the  third 
"defect"  mentioned  in  the  Explanatory  'Note  is  that 
only  a  part  of  the  budget  is  drawn  up  in  accordance 

•  M.    Vindebot,    article    on    "The    Budget    of    the    Supreme    Council," 
Ekonomicheskaya  Zhisn,  February   17,   1920. 


MANAGEMENT  227 

with  definite  plans  and  estimates.  In  the  first  budget 
(first  half  of  1918),  a  very  small  part  of  it  was  spent 
according  to  plans ;  dviring  the  second  half,  such  expen- 
ditures were  60  to  70  per  cent,  of  the  other  part  of  the 
budget;  in  the  third  budget,  they  constituted  75  per 
cent. ;  while  in  the  fourth,  they  were  already  twice  the 
amount  spent  without  preliminary  plans  or  estimates. 
Considering,  however,  the  growth  of  the  budget,  the 
Explanatory  Note  considers  it  justified  to  call  this  state 
of  affairs  a  "defect."  For  when  we  turn  to  concrete 
figures,  we  find  that  during  the  second  half  of  1919, 
the  amount  spent  without  preliminary  plans  and  simply 
entered  into  the  expenditures  of  the  Government  as  a 
whole  constituted  over  ten  billion  roubles,  to  which  must 
be  added  almost  four  billion,  spent  in  a  similar  fash- 
ion by  the  divisions  of  the  Supreme  Council  concerned 
with  public  works.* 

Now,  if  we  take  a  concrete  illustration  of  what  the 
growth  of  overhead  expenses  means  in  the  finances  of 
the  nationalized  industry,  we  shall  get  the  following  pic- 
ture. Taking  calico,  as  a  commodity  of  great  impor- 
tance in  the  national  life  of  Russia,  Table  No.  2  given 
on  p.  228  shows  the  relative  importance  of  various 
factors  in  the  production  of  calico  at  various  periods. 

This  table  is  an  excellent  indication  of  the  price 
that  Russia  is  paying  for  her  loss  of  labor  discipline  and 
for  the  system  of  management  that  she  has  to-day  in  her 
industry. 

When  we  come  to  the  question  of  distribution,  we  find 
a  similar  picture  there,  with  all  the  "defects,"  pointed 
out   in    the   Explanatory   Note   to   the   budget   of   the 

•  M.    Vlndebot,    loc.    clt. 


228  ECONOMICS  OF  COMMUNISM 

Table  No.  2 

Cost  of  Factors  in  Production  of  Calico  * 

Retail  Raw 

price  cotton        Labor        Overhead 

(in  cop.)  (%  of  retail  price) 

18.5  28.4  13.8  35.4 


August  1,  1914   . 
June  1,  1917    .  . . 

May  1,  1918 

November  1,  1918 

January  1,  1919 

September  1,  1919  ..1660.0  6.6  18.3 


77.0  16.0  22.0  32.5 

202.0  20.0  24.2  39.3 

360.0  11.2  27.6  42.1 

757.0  5.3  21.2  49.3 


Supreme  Council  of  ISTational  Economy  present  there. 
The  decree  of  March,  1919,  followed  by  that  of  Janu- 
ary, 1920,  unified  the  whole  system  of  distributive  co- 
operation, placing  its  apparatus  at  the  disposal  of  the 
Soviet  Government.  In  most  of  the  provinces  the 
amalgamation  of  the  various  forms  of  cooperation  and 
the  introduction  of  Soviet  control  in  them  through  the 
induction  of  Communist  majorities  throughout  has  been 
completed.  A  huge  apparatus  with  a  very  large  per- 
sonnel constitutes  the  system  of  cooperative  distribution. 
How  much  work  does  this  apparatus  perform  ? 

Figures  are  available  for  one  of  the  first  Governments 
to  carry  out  the  reorganization,  prescribed  by  the  March 
decree,  viz.,  the  Government  of  Saratov. j-  Its  Provin- 
cial Union  employs  400  persons.  It  has  ten  regional 
unions,  each  employing  150  men.  Then  there  are  500 
stores,  each  employing,  on  an  average,   ten  to  fifteen 

•  Ekonomicheskaya   Zhisn,   March   9,    1920. 

t  These    figures  are  taken    from   an    article   on    "Cooperation,"   by   A. 
Fokin,  in  Ekonomicheskaya  Zhisn,  June  9,  1920. 


MANAGEMENT  229 

men,  altogether  about  5,000.  Thus  the  cooperative  ap- 
paratus of  the  province  has  a  working  personnel  of 
nearly  6,900.  This  does  not  include  the  employees  of 
the  municipal  consumers'  leagues,  the  number  of  whom 
is  not  available.  Nor  does  it  include  the  representa- 
tives of  the  central  cooperative  institutions,  whose  num- 
ber also  is  not  available. 

The  turnover  in  1919  was  258  million  roubles.  Tak- 
ing only  the  available  figiire  for  the  personnel,  viz., 
6,900,  we  get  36,000  roubles  for  each  employee.  Since 
prices  in  1919  were  considered  to  be  about  sixty  times 
higher  than  the  pre-war  prices,  the  turnover  per  em- 
ployee was  about  600  roubles  at  normal  value.  If  we 
add  in  the  number  of  employees  in  the  municipal  con- 
sumers' leagues,  the  turnover  per  man  would  be  still 
smaller. 

Now,  each  employee  in  wages  and  food  ration  cost  in 
1919  about  24,000  roubles,  or  a  total  of  165  million 
roubles.  In  other  words,  the  personnel  alone  of  the  co- 
operative apparatus  of  distribution  cost  the  Govern- 
ment 65  per  cent,  of  the  total  turnover. 

If  we  increase  these  figures  to  cover  the  whole  coun- 
try, the  situation  will  be  quite  obvious. 

Taken  together,  the  two  phases  of  the  Soviet  economic 
system,  the  nationalized  production  and  the  cooperative 
distribution,  from  the  point  of  view  of  their  financial 
management,  show  a  maze  of  figures  that  have  been  well 
characterized  as  "astronomical"  on  the  side  of  the  ex- 
penditures, and  an  utter  chaos  on  the  side  of  revenues 
and  results.  And  when  we  turn  to  the  total  budget 
of  the  Soviet  state,  we  find  that  the  estimate  for  1920 


230  ECONOMICS  OF  COMMUNISM 

called  for  150  billion  roubles  in  revenues  and  1,100 
billion  roubles  in  disbursements.* 

6.     Taking  Over  the  Experience  of  the  Bourgeoisie 

By  tbe  end  of  1919,  i  e.,  after  tbeir  first  two  years  in 
power,  the  Soviet  leaders  came  to  a  realization  that 
different  economic  methods  are  necessary  in  the  work 
of  economic  management.  It  was  this  realization  that 
Lenin  expressed  so  aptly  in  one  of  his  speeches,  when 
he  said,  "The  closer  we  come  to  the  work  of  adminis- 
tration and  management,  the  more  we  realize  that  we 
do  not  know  how  to  manage." 

The  Soviet  leaders  saw  clearly  that  the  inefficiency 
which  became  the  rule  of  the  day  in  every  domain  of  the 
country's  economic  life  was  due  primarily  to  the  methods 
which  were  being  applied,  and  they  set  to  work  changing 
some  of  those  methods.  And  it  is  very  interesting  that 
at  this  period  of  their  career  they  became  timid  about 
experimenting  with  untried  notions  and  began  to  turn 
back  to  what  they  termed  the  "experience  of  the  bour- 
geoisie." 

At  the  beginning  of  the  Soviet  regime,  in  March, 
1918,  when  the  question  first  came  up  about  the  pay- 
ment of  large  salaries  to  specialists,  Lenin  justified  this 
on  the  ground  of  necessity,  and  characterized  it  as  a 
"compromise,"  a  concession  to  the  bourgeois  opposi- 
tion.f  Two  years  later,  in  March,  1920,  in  discussing 
the  question  of  management  from  the  point  of  view  of 
whether  it  should  be  by  individuals  or  by  committees, 

*  Ekonomirheskaya   Zhisn,   September   28,    1920. 

t  N.  Lenin,  "Thie  Problems  of  the  SovIetB,"  New  York  edition  In 
Russian,   p.    18. 


MANAGEMENT  231 

Lenin  characterized  those  who  were  in  favor  of  the 
collegiate  principle  as  exhibiting  "an  insufficiently  high 
level  of  class  consciousness."  In  this  speech  of  his, 
Lenin  assures  us  that  whenever  he  thinks  of  this  ques- 
tion, he  wants  to  say :  "The  workmen  have  not  learned 
enough  from  the  bougeoisie."  * 

The  point  that  Lenin  made  in  this  speech  and  in  a 
number  of  other  speeches  at  this  period  refers  not  only 
to  the  question  of  management,  but  also  to  other  phases 
of  economic  activities.  And  his  speeches  were  only 
a  part  of  the  general  campaign  of  agitation  which  the 
Soviet  authorities  conducted  in  favor  of  a  reorganiza- 
tion of  the  whole  industrial  apparatus  on  a  basis  that 
would  be  different  from  that  hitherto  used.  The  change 
was  to  consist  in  introducing  efficiency  by  the  methods 
already  tried  successfully  under  the  capitalistic  order, 
rather  than  by  the  problematic  methods  which  Com- 
munism attempted  to  introduce  during  the  first  two 
years  of  the  regime.  In  one  of  these  efforts  at  agita- 
tion in  favor  of  new  methods,  the  situation  was  sum- 
marized as  follows: 

Let  us  imagine  that  by  some  miracle  the  whole  bourgeois 
class  would  undergo  internal  transformation  and  that  the 
former  owners  of  all  enterprises  in  agriculture,  industry, 
trade,  and  transportation  would  begin  to  work  not  for  their 
own  pockets,  but  for  the  State  as  a  whole.  This  would  mean, 
for  example,  that  all  such  owners  would  give  up  their 
profits  and  their  claim  to  surplus  value  and  would  be  satis- 
fied to  get  wages  for  their  work.  It  is  clear  that  under 
such  circumstances,  the  whole  economic  apparatus  of  the 
bourgeoisie  would  be  suitable  for  our  purposes  and  that  it 

*  Lenln'a  Speech  at  the  Third  All-RusBian  Congress  of  Transport 
Workers. 


232  ECOXOMTCS  OF  COMMUNISM 

would  not  be  necessary  to  demolish  any  part  of  it.  All  the 
workmen,  employees,  managers,  directors,  owners  could  re- 
main where  they  were.  The  whole  apparatus  would  simply 
cease  working  for  individual  profits.  Each  person,  taking 
part  in  the  work,  would  satisfy  his  needs  out  of  that  unified 
fund  which  would  have  been  created  out  of  the  products  of 
the  whole  apparatus,  and  which  Soviet  Russia  is  now  trying 
to  create  by  means  of  the  Supreme  Council  of  National 
Economy  and  the  reorganized  system  of  cooperation. 

But  this  ideal  state  of  affairs  did  not  come  to  pass. 
At  the  same  time,  the  workmen  have  never  had  any 
experience  in  management.  So  it  becomes  necessary 
to  take  over,  if  the  whole  apparatus  of  the  bourgeois 
system  is  inaccessible,  at  least  some  parts  of  its  ex- 
perience. The  author  of  the  article  from  which  we 
have  just  quoted  the  above  description  *  enumerates 
some  of  the  things  in  the  experience  of  the  bourgeoisie 
which  ought  to  be  taken  over  by  the  Soviet  regime. 
With  regard  to  labor,  as  we  saw  in  the  preceding  chap- 
ter, piece  work  and  premiums,  developed  under  the  cap- 
italistic system  to  stimulate  effort  and  increase  pro- 
ductivity, should  be  introduced  also  by  the  Communist 
economic  regime.  But  since  they  are  insufficient  under 
either  system,  compulsion  should  be  also  used.  And 
here,  as  we  have  already  seen,  the  Communist  regime 
has  gone  far  beyond  its  predecessor. 

With  regard  to  management,  two  things  are  impor- 
tant. In  the  first  place  it  is  necessary  to  get  back 
as  many  of  the  old  managers  and  technical  directors 
as  possible.  They  have  had  the  experience  necessary 
for  the  managing  of  industries ;  new  managers  and  di- 

•  Kiy,  article  on  Management,  Ekonomicheskaya  Zhisn,  January  11, 
1920. 


MANAGEMENT  233 

rectors  cannot  be  trained  to  take  their  places  over  night ; 
hence  every  eifort  should  be  made  to  bring  them  back. 
But  merely  to  have  them  back  is  not  enough.  They 
must  be  placed  in  conditions  in  which  they  can  perform 
their  tasks  with  an  adequate  degree  of  success.  And 
here  again  the  experience  of  the  bourgeoisie  is  invoked. 

The  author  of  the  article  goes  to  particular  pains 
to  show  that  the  trend  of  development  in  modem  in- 
dustry under  capitalism  has  been  in  the  direction  of 
making  the  actual  managers  of  enterprises  responsible 
to  fairly  large  groups,  the  stock  companies.  Un- 
der these  conditions  it  becomes  immaterial  whether  the 
managers  are  individuals  or  groups;  the  important 
thing  is  the  fixing  of  responsibility.  Once  that  is  done, 
whichever  form  proves  more  efficient  should  be  used. 
So  under  the  Communist  regime,  too,  when  all  managers 
must  bear  responsibility  before  the  Supreme  Council 
of  National  Economy  and  the  central  governing  body 
of  the  cooperation,  the  same  principle  of  efficiency 
should  be  applied,  regardless  of  form. 

It  is  clear  enough  that  when  such  pains  are  taken 
to  prove  something,  there  must  be  a  powerful  opposition 
to  it.  And  on  the  question  of  management  there  was 
a  very  marked  difference  of  opinion  among  various 
Soviet  leaders,  based,  however,  not  on  the  question  of 
efficiency  or  efficacy  of  one  forai  or  the  other,  but  on 
the  degree  of  the  compromise  with  the  principles  of 
Communism  demanded  by  the  acceptance  of  the  bour- 
geois experience.  This  question  was  finally  settled  at 
the  Ninth  Congress  of  the  Communist  Party,  and  the 
victory  rests  entirely  with  those  elements  which  are 


234  ECONOMICS  OF  COMMUNISM 

strongest  in  favoring  tJie  acceptance  of  the  economic 
experience  of  the  bourgeoisie. 

7.     Collegiate  or  Individwal  Management? 

In  the  discussions  of  the  question  of  industrial  man- 
agement as  far  as  the  acceptability  of  the  various  forms 
from  the  point  of  view  of  class  principles  was  concerned, 
many  different  opinions  were  entertained  by  various 
factions. 

At  one  extreme  was  the  group  which  held  that  the 
to  do  with  the  question  of  class  principles.  This  group 
form  of  industrial  management  has  nothing  whatever 
pleaded  that  the  question  of  management  should  be 
looked  upon  entirely  from  a!  practical  point  of  view, 
and  that  in  its  determination  the  experience  of  the 
boui-geois  system  should  be  taken  into  account.  The 
most  important  spokesmen  for  this  group  were  Lenin 
and  Trotsky  themselves.  In  the  speech  at  the  Third 
All-Russian  Congress  of  Transport  Workers,  which  we 
have  already  quoted,  Lenin  pleaded  that  the  proletariat 
should,  on  this  question,  show,  at  least,  as  much  class 
consciousness  as  is  ordinarily  shown  by  the  bourgeoisie. 
He  said: 

Was  it  possible  in  the  former  times  for  any  one  who  con- 
sidered himself  a  defender  of  the  bourgeoisie  to  say  that 
there  should  not  be  any  individual  authority  in  the  admin- 
istration of  the  state?  If  such  a  fool  should  have  been 
found  among  the  bourgeoisie,  the  other  members  of  his  class 
would  have  laughed  at  him.  They  would  have  said  to  him, 
"What  has  the  question  of  individual  or  collegiate  manage- 
ment to  do  with  the  questions  of  class?" 


MANAGEMENT  235 

The  policy  urged  by  this  group  is  tihe  practical  aboli- 
tion of  the  collegiate  principle  in  the  whole  system  and 
its  complete  immediate  abolition  at  the  lower  stages  of 
the  system  of  industrial  management,  i.  e.,  at  the  sep- 
arate enterprises. 

The  other  extreme  was  represented  by  the  group 
which  proclaimed  the  collegiate  principle  in  manage- 
ment as  the  only  one  confonning  with  the  ideals  of  the 
dictatorship  of  the  proletariat,  and  conversely,  the 
principle  of  individiial  management  as  betrayal  of  these 
ideals.  The  spokesman  for  this  group  was  M.  Tomsky, 
the  President  of  the  Executive  Committee  of  the  Trade 
Unions.  In  his  theses  on  the  role  of  the  trade  unions 
in  the  economic  life  of  the  country,  presented  to  the 
All-Kussian  Congress  of  Trade  Unions,  Tomsky  de- 
clared that  the  only  way  of  insuring  an  effective  partici- 
pation of  the  workmen  in  actual  management  is  through 
a  universal  application  of  the  system  of  collegiate  man- 
agement. 

An  attempt  to  hold  the  middle  course  between  these 
two  extreme  \dews  was  made  by  a  group,  without  any 
outstanding  spokesmen,  which  presented  a  series  of 
theses  on  the  subject  to  the  Ninth  Congress  of  the  Com- 
munist Party.  In  these  thesesi  the  principle  was  laid 
down  that  neither  of  the  two  forms  of  management 
constitutes  in  itself  the  "only  and  the  inevitable"  form 
for  the  proletarian  authority,  and  that  the  significance 
of  each  may  vary  "in  different  branches  of  management 
and  under  different  historic  conditions."  Moreover, 
neither  of  the  two  forms  may  be  considered  absolutely 
superior  technically;  for,  "if  the  individual  manage- 
ment is  the  simpler  form,  the  collegiate  management 


236  ECONOMICS  OF  COMMUNISM 

guarantees  a  fuller  degree  of  attention  and  study  given 
to  eacli  decision." 

At  the  same  time,  the  collegiate  form  should  be  con- 
sidered the  higher  type  of  the  two  for  several  reasons. 
In  the  first  place,  it  teaches  ''to  treat  and  decide  par- 
ticular questions  from  the  point  of  view  of  the  inter- 
ests of  the  whole."  In  the  second  place,  it  brings  the 
fonner  bourgeois  specialists  in  contact  with  the  pro- 
letarians and  leads  them  to  become  permeated  with 
the  proletarian  psychology.  Finally,  it  makes  respon- 
sible workers  less  likely  to  drop  into  grooves  of  narrow 
specialization.  In  view  of  this,  the  system  of  collegiate 
management  should  be  preserved  even  at  the  factories, 
where,  however,  the  committees  of  management  should 
be  made  as  small  as  possible.  Individual  management 
should  be  introduced  only  in  special  cases,  particularly 
at  the  smaller  enterprises  and  at  the  militarized  works. 
Special  care  should  be  given  to  the  membership  of  the 
managing  gi-oups  from  the  point  of  view  of  efficiency.* 

The  Ninth  Congress  of  the  Russian  Communist 
Party,  held  in  April,  1920,  in  its  resolution  on  the  sys- 
tem of  management,  adopted  as  the  fundamental  princi- 
ple the  idea  that  the  collegiate  form  is  more  desirable  in 
deliberations  resulting  in  decisions,  but  that  the  form 
of  individual  management  is  more  desirable  in  work 
of  execution,  in  the  carrying  out  of  these  decisions. 
For  the  immediate  future  the  following  forms  of  man- 
agement are  prescribed :  In  the  divisions  and  separate 
shops   of  the   large  factories    individual   management 

•  Theses  on  Collegiate  and  Individual  Management,  by  N.  Ossinsky,  T. 
Sapronov  and  V.  Maximovsky,  published  in  Ekonomicheskaya  Zhisn, 
March    28,   1920. 


MANAGEMENT  237 

should  be  introduced  everywhere.  As  soon  as  possible, 
all  collegiate  forms  in  the  management  of  whole  fac- 
tories should  be  abolished  and  individual  managers  sub- 
stituted for  them.  At  the  intermediate  and  the  higher 
stages  of  the  industrial  administrative  apparatus,  the 
collegiate  system  should  still  be  preserved,  but  in  an 
abbreviated  form,  i.  e.,  the  membership  of  the  commit- 
tees should  be  reduced  as  far  as  possible. 

Four  diiferent  forms  of  management  for  individual 
enterprises  are  included  in  the  resolution  of  the  Con- 
gress. First,  the  manager  may  be  a  workman,  in 
which  case  he  must  have  a  specialist  as  a  technical  as- 
sistant. Second,  the  manager  may  be  a  specialist,  in 
which  case  he  must  have  a  Communist  commissary 
working  with  him.  Third,  the  manager  may  be  a  spe^ 
cialist,  but  with  one  or  two  Communist  Commissaries, 
whose  prerogatives  would  be  greater  than  in  the  second 
case  and  would  give  them  the  right  in  special  cases  to 
control  the  manager's  decision.  Fourth,  in  some  enter- 
prises, collegiate  management  may  be  permitted  as  an 
exception,  if  the  managing  group  shows  signs  of  effi- 
ciency. 

By  the  introduction  of  these  new  forms  of  manage- 
ment, the  Soviet  regime  hopes  to  overcome  the  disor- 
ganization caused  by  its  experimentation  with  the  forms 
which  are  now  being  discarded. 

8.     Concentration  of  Effort 

The  introduction  of  new  forms  of  management,  how- 
ever, is  not  the  only  thing  that  the  Soviet  regime  counts 
upon  for  at  least  some  efficiency  in  its  industrial  man- 


238  ECONOMICS  OF  COMMUNISM 

agement.  It  also  makes  attempts  now  to  introduce  a 
concentration  of  economic  effort  for  which  a  pre- 
liminary plan  of  work  was  devised  by  the  Ninth  Con- 
gress of  the  Communist  Party. 

This  plan  of  work  is  divided  into  four  periods.  The 
first  is  devoted  to  the  stabilization  of  the  apparatus  for 
the  obtaining  of  food  supplies  and  fuel  and  for  the 
reestablishment  of  the  system  of  transportation.  The 
second  period  is  that  of  the  construction  of  the  machin- 
ery necessary  for  the  means  of  transportation,  the  ex- 
traction of  raw  materials  and  the  production  of  food 
supplies.  The  third  period  covers  the  construction  of 
the  machinery  necessary  for  the  satisfaction  of  mass 
consumption.  Finally,  the  fourth  period  is  devoted 
to  the  production  of  articles  of  general  consumption. 
With  the  termination  of  the  fourth  period,  the  economic 
life  of  the  country  would  be  practically  normal. 

This  plan  was  devised  by  a  group  of  theoretical 
economists  and  was  sponsored  at  the  Party  Congress  by 
Trotsky.  Its  discussion  occasioned  many  heated  de- 
bates, in  the  course  of  which  it  was  pointed  out  that  the 
plan  of  dividing  the  economic  effort  of  the  country  into 
such  arbitrary  periods  is  entirely  theoretical  and  un- 
workable, that  economic  processes  do  not  operate  in  this 
manner  at  all,  etc.  Nevertheless,  the  plan  was  adopted 
in  practically  this  form  and  is  embodied  in  the  resolu- 
tions of  the  Congress. 

For  the  immediate  purpose  a  still  further  concentra- 
tion of  effort  is  being  introduced.  The  more  impor- 
tant industries  are  divided  into  two  groups:  the  group 
of  enterprises  which  can  perform  good  work,  and  the 


MANAGEMENT  239 

remaining  enterprises.  The  first  group  is  singled  out 
and  is  given  a  name  borrowed  from  military  experience, 
viz.,  the  "shock"  group.  Just  as  the  war  developed  a 
system  of  "shock"  troops,  so  the  militarized  industry 
in  Russia  under  the  Soviet  regime  is  to  have  "shock" 
groups  of  factories.  These  factories  are  placed  in  priv- 
ileged conditions  with  regard  to  supplies  of  labor,  food, 
fuel,  and  raw  materials,  and  are  expected  to  show 
greater  productivity. 

The  extent  of  total  disorganization  of  Eussia  under 
the  Soviet  system  of  management  and  the  paucity  of  the 
resources  at  the  disposal  of  the  regime  for  purposes  of 
economic  reconstruction  may  be  seen  from  the  moderate- 
ness of  the  "shock"  program.  In  metallurgy,  for  ex- 
ample, sixty  enterprises  have  been  chosen,  or  one^quarter 
of  the  total  number  merged  by  the  Soviet  regime  into 
the  metal  trust.  They  are  expected  to  give  twenty  mil- 
lion pouds  of  pig  iron,  as  against  the  pre-war  produc- 
tion (for  the  whole  of  Russia  with  the  exception  of 
Poland)  of  257  million  pouds.*  In  the  textile  indus- 
try, the  "shock"  group  in  the  cotton  goods  branch  con- 
sists of  seventeen  factories  with  a  total  of  434,200 
spindles,  as  against  the  pre-war  total  for  the  whole 
country  of  over  seven  million  spindles ;  in  the  weaving 
branch,  the  "shock"  group  comprises  17,841  looms  as 
against  a  total  of  164,700  looms  already  nationalized.! 

No  estimate  is  given  of  the  number  of  years  that  it 
would  take  to  carry  out  the  plan  of  reconstruction  for 
all  of  its  four  periods.  But  judging  by  the  plan  of  the 
Commissariat  of  Ways  of  Communication  (see  Chapter 

•  Ekonomicheskaya   Zhisn,  April    28,    1920. 
t  Ibid.,  June  24,  1920. 


240  ECONOMICS  OF  COMMUNISM 

I)  to  spend  four  and  one  half  years  on  the  railroad 
rolling  stock  alone,  and  judging  also  by  the  speed  indi- 
cated by  the  "shock"  program,  the  pace  of  reconstruc- 
tion appears  to  be  very  slow,  indeed. 


CHAPTER  V 

AGRICULTURE  AND  THE  PEASANTRY 

Russia  is  primarily  an  agricultural  country;  rural 
economy  is  the  basis  of  her  whole  economic  life. 
Eighty-five  per  cent,  of  her  population  is  peasantry, 
traditionally  either  actually  or  in  aspiration  small  land 
proprietors.  Her  methods  of  agriculture  have  always 
been  primitive,  non-capitalistic,  except  on  a  small  num- 
ber of  large  landed  estates.  In  no  domain  of  Russia's 
economic  life,  therefore,  have  the  general  conditions 
been  less  suited  for  the  purpose  of  introducing  Social- 
ism and  Communism ;  nowhere  have  greater  difficulties 
been  encountered.  The  attitude  of  the  peasantry  is 
the  third  fundamental  human  factor  in  the  situation 
created  in  the  course  of  Russia's  experiment  in  the 
economics  of  Communism. 

We  have  already  seen  in  Part  One  what  difficulties 
the  Soviet  regime  faced  from  the  point  of  view  of  the 
forms  of  a  Socialistic  scheme  of  agrarian  arrangement, 
as  well  as  some  of  the  results  achieved  so  far  in  this 
direction.  We  shall  now  examine  in  detail  the  various 
phases  of  the  problem  which  the  Soviet  economic  regime 
has  been  compelled  to  face  in  its  relations  with  the  peas- 
antry, its  attempts  to  organize  agricultural  production, 
and  its  efforts  to  solve  the  pressing  questions  of  the 
food  crisis. 

241 


242  ECONOMICS  OF  COMMUNISM 

1.     The  Peasants  and  the  Land 

The  watchword  of  the  peasantry  through  both  Rus- 
sian revolutions  was  "Land  and  Freedom."  This 
watchword  the  Bolshevist  leaders  had  to  meet  and  to 
satisfy,  at  least  outwardly,  at  the  very  outset.  One  of 
their  first  acts  after  coming  into  power  was  a  decree 
concerning  the  land,  issued  November  7,  1917. 

By  virtue  of  this  decree,  all  land  formerly  held  by 
landowners  was  confiscated  without  any  compensation. 
The  confiscated  lands  were  ordered  to  be  placed  at  the 
disposal  of  the  local  land  committees  and  councils  of 
peasants'  deputies  up  to  such  time  as  the  All-Russian 
Constituent  Assembly  would  decide  definitely  the  whole 
agrarian  question.  The  lands  belonging  to  peasants 
and  Cossacks  were  specifically  excluded  from  confisca- 
tion. 

At  the  same  time  a  set  of  regulations  was  adopted 
which  were  to  serve  as  temporarily  governing  all  rural 
activities  from  the  point  of  view  of  agrarian  arrange- 
ments. These  regulations,  issued  by  the  Soviet  Gov- 
ernment as  a  provisional  law,  again  operative  until  the 
action  of  the  Constituent  Assembly,  were  to  be  consid- 
ered as  the  bases  of  the  agrarian  legislation  desirable 
from  the  viewpoint  of  the  new  regime. 

The  basis  of  these  provisional  arrangements  was  the 
abrogation  of  the  institution  of  private  property  to 
land.  Under  the  plan  proposed,  all  land,  confiscated 
by  the  decree,  as  well  as  left  by  it  in  the  possession  of 
the  peasantry,  should  become  the  property  of  the  whole 
people  and  should  be  used  only  by  those  who  actually 
work  on  it.     Former  estates  with  a  high-degree  of  agri- 


AGRICULTURE  AND  THE  PEASANTRY    243 

cultural  development  should  not  be  cut  up,  but  left 
intact  for  utilization  by  the  state  or  by  communities. 
All  the  technical  equipment  on  such  estates  should  be 
confiscated  by  the  state,  while  the  tools,  implements,  live 
stock,  etc.,  in  the  possession  of  the  peasants  should  be 
left  undisturbed.  Thus,  the  whole  area  of  tillable  land 
would  become  the  property  of  the  whole  people,  ad- 
ministered by  the  state.  The  means  for  working  this 
land  would  be  partly  left  in  the  hands  of  the  peasants, 
and  partly  become  the  property  of  the  state. 

All  citizens,  of  both  sexes,  would  receive  the  right 
to  work  the  land,  provided  they  can  do  so  with  their 
own  hands  or  with  the  assistance  of  their  families.  All 
forms  of  hired  labor  were  forbidden.  If  any  member 
of  a  village  community  would  find  himself  incapacitated 
for  a  period  not  exceeding  two  years,  the  community 
should  till  his  land  for  him.  When  the  period  of  in- 
capacitation would  exceed  two  years,  the  invalid  must 
lose  his  right  to  the  use  of  the  land,  and  the  state  must 
pension  him. 

The  land  in  a  given  locality  must  be  divided  equally 
among  the  whole  working  population  in  accordance  with 
local  conditions.  Land  may  be  used  individually,  by 
groups,  communities,  villages,  etc.  In  each  locality 
the  land  should  be  redivided  periodically.  If  at  the 
time  of  land  division,  the  area  of  tillable  land  should 
be  found  insufficient  to  supply  the  needs  of  the  popu- 
lation, the  excess  of  the  population  may  be  moved  to 
another  locality,  the  expense  of  such  migration  to  be 
borne  by  the  state. 

In   the   meantime   all    damage   done  to   confiscated 


244-  ECONOMICS  OF  COMMUNISM 

property  was  to  be  considered  a  revolutionary  crime  to 
be  severely  punished. 

This  plan  was  sanctioned  by  the  Second  All-Russian 
Congress  of  Soviets,  which  was  in  session  at  the  time 
of  the  overthrow  of  the  Provisional  Government. 
After  the  Constituent  Assembly  was  dispersed  by  the 
Soviet  Government  and  the  Third  All-Russian  Con- 
gress of  Soviets  met  as  the  highest  legislative  body,  it 
approved  practically  this  entire  plan,  restating  it  in 
terms  of  the  socialization  of  land.  The  distribution  of 
land,  called  for  by  the  plan,  was  begun  in  the  spring 
of  1918. 

There  was  no  uniform  system  of  land  distribution. 
Each  province  or  Government  used  its  own  methods 
with  greater  or  lesser  degree  of  success.  And  it  was 
only  natural  in  the  course  of  events  that  the  local 
authorities  charged  with  the  task  were  utterly  unable 
to  cope  with  the  situation. 

In  the  Government  of  Tula,  for  example,  the  Pro- 
vincial Commissariat  of  Agriculture  sent  out  a  circular 
on  March  13,  telling  the  peasants  that  each  community 
would  be  given  precise  information  as  to  what  lands 
in  the  vicinity  were  subject  to  redivision  and  that  over 
one  hundred  surveyors  would  be  detailed  by  the  Com- 
missariat for  the  purpose.  However,  neither  of  these 
promises  could  be  carried  out  by  the  Commissariat. 
Even  if  all  the  surveyors  could  be  sent  out  (which  was 
not  done  in  reality),  each  of  them  would  have  had  to 
cover  at  least  sixty  districts ;  an  obvious  impossibility. 
Moreover,  not  all  parts  of  the  Government  had  land 
available  for  redistribution.  In  actual  practice,  the 
following  took  place:  in  the  localities  where  lands  for- 


AGEICULTUEE  AND  THE  PEASANTRY    345 

merly  owned  by  private  individuals  were  found,  they 
were  cut  up  and  divided  among  the  peasants;  in  the 
localities  where  no  such  lands  were  found,  the  peasants 
received  no  additional  land.  Moreover,  the  peasants 
who  had  more  land  than  the  norm  set  for  the  province 
were  deprived  of  a  part  of  their  holdings.  All  sorts 
of  enmities  among  the  peasants  themselves  ensued. 
In  some  places,  where  the  peasants  of  one  community 
had  to  cross  the  territory  of  another  to  get  to  some  of 
their  lands,  they  often  found  the  way  blocked  and  their 
possessions  actually  separated.  And  when  the  whole 
preliminary  work  of  redistribution  was  finally  com- 
pleted, many  peasants  found  themselves  still  without 
any  land:  there  was  not  enough  for  all,  while  the 
moving  of  the  excess  population  to  other  parts  of  the 
country  was  a  physical  impossibility.* 

In  the  Government  of  Tambov  the  peasants  began 
the  introduction  of  the  agrarian  reform  with  the 
destruction  of  the  well-organized  estates,  ordered  confis- 
cated by  the  Soviet  Government.  This  work  of  destruc- 
tion was  going  on  practically  the  whole  winter  of 
1917-18,  and  over  a  thousand  estates  were  lost.  The 
official  organ  of  the  Zemstvo  stated  at  the  time  that 
instead  of  the  extensive  technical  equipment  which  was 
expected  as  a  result  of  the  confiscation  of  the  landed 
estates,  the  agricultural  work  during  the  spring  that 
was  then  approaching  "would  have  nothing  in  the  way 
of  implements,  live  stock,  etc. ;  it  would  have  to  be  done 
almost  with  bare  hands."  Buildings  and  implements 
were  destroyed;  live  stock  killed  off  or  sold  for  trifles 

•  Moscow  Novy  Den,  May  15,  1918. 


246  ECONOMICS  OF  COMMUNISM 

by  the  looting  peasantry.  Under  such  conditions,  even 
the  cutting  up  of  the  estates  for  the  use  of  the  peasants 
promised  little  improvement  in  their  condition.* 

The  situation  was  greatly  complicated  by  the  fact 
that  while  this  work  of  redistribution  was  in  prepara- 
tion or  in  actual  progress,  there  were  two  disturbing 
elements,  both  making  for  an  intensification  of  the 
already  existing  spirit  of  enmity.  The  first  of  these 
disturbing  elements  was  the  inflow  of  returning  sol- 
diers. Millions  of  them  rushed  back  to  the  villages  from 
the  battle-front.  Practically  all  of  them  brought  back 
with  them  Bolshevist  ideas  and  larger  or  smaller 
amounts  of  ammunition,  but  very  little  desire  to  work. 
As  a  result,  the  number  of  "eaters"  increased,  while  the 
land  allotted  for  each  "eater"  correspondingly  de- 
creased. The  question  of  the  number  of  "eaters"  was 
rendered  more  important  by  the  second  disturbing  ele- 
ment, the  efforts  on  the  part  of  the  Soviet  Government 
to  obtain  grain ;  for  the  food  crisis  became  acute  almost 
from  the  moment  that  the  Soviet  Government  came  into 
power. 

2.     The  Food  Crids 

The  food  crisis  began  before  the  March  revolution 
and  continued  through  the  first  period  of  the  revolu- 
tion. But  it  took  a  very  sudden  change  for  the  worse 
as  soon  as  the  Bolsheviki  came  into  power.  The  follow- 
ing figures  indicate  the  situation  graphically  for  one 
of  the  principal  grain-producing  Governments  of  Cen- 
tral Russia  :f 

*  Moscow  Uusskiya  ViedomosH,  February  22,  1918. 
t  Prodovolstvennoye  Dyelo,  March,   1918. 


AGRICULTURE  AND  THE  PEASANTRY    247 

Table  No.  1 

Shipments  of  Grain  from  the  Government  of  Tamhov 
(In  thousands  of  pouds) 

September  October  November  December  January 

1916-17 700         2,800  2,050  2,500        5,650 

1917-18 2,750         1,600  120  115  30 

The  figure  for  October,  1917,  already  indicates 
unwillingness  on  the  part  of  tlie  peasants  to  give  up 
their  grain  to  the  Government.  That  was  the  last  month 
of  the  Provisional  Government.  At  the  beginning  of 
November  the  Bolsheviki  came  into  power,  and  the 
shipments  for  November  and  December,  1917,  indicate 
the  hostility,  which  the  peasants  showed  towards  the 
Soviet  regime  from  the  very  beginning.  The  figure  for 
January,  1918,  is  still  more  striking,  both  as  indicative 
of  increasing  hostility,  and  in  comparison  with  the 
figure  for  the  same  month  of  the  preceding  year :  there 
is,  indeed,  a  colossal  difference  between  the  5,650,000 
pouds  shipped  in  January,  1917,  and  30,000  pouds 
shipped  in  January,  1918. 

Other  provinces  showed  the  same  state  of  affairs 
statistically.  If  the  amounts  of  grain  indicated  in  these 
figures  were  all  that  was  shipped,  then  practically  the 
whole  population  of  tlie  provinces  that  raise  no  grain 
would  have  died  the  very  first  few  months  of  the 
Bolshevist  regime.  Apparently  these  figures  tell  only 
one  part  of  the  story.  They  refer  to  grain  actually 
obtained  and  shipped  by  the  governmental  agencies. 
But  grain  found  its  way  into  the  starving  sections  of 
the  country  in  another  way. 


248  ECONOMICS  OF  COMMUNISM 

In  the  latter  part  of  its  regime,  the  Provisional 
Government  introduced  a  grain  monopoly  as  one  of  its 
measures  for  fighting  the  rapidly  mounting  prices  of 
foodstuffs,  which  were  really  changing  with  a  kaleido- 
scopic rapidity,  as  we  already  noted  in  the  chapter  on 
Labor.  The  Government  declared  itself  the  only 
authorized  purchaser  of  grain  and  fixed  the  prices  at 
which  grain  could  be  sold.  The  Bolsheviki  took  over 
this  system  in  its  entirety,  and  gradually  extended  it  to 
include  practically  all  foodstuffs.  The  result  of  this 
measure  was  that  the  peasants  began  to  refuse  to  sell 
their  grain  to  the  governmental  agencies,  so  that  the 
provinces  which  produce  no  grain  found  themselves  cut 
off  from  their  food  supply. 

As  early  as  the  second  half  of  1917,  under  the  in- 
fluence of  the  growing  food  crisis,  there  grew  up  of 
its  own  accord  a  new  system  of  grain  distribution: 
individual  peasants  and  workmen  from  the  starving 
provinces  would  go  to  grain-producing  provinces  and 
bring  back  bags  of  flour,  grain,  etc.  These  men  became 
known  as  "bagmen" ;  this  was  the  beginning  of  one 
of  the  most  important  phases  of  the  system  of  "speku- 
lyatsia,"  of  which  we  spoke  before.  The  Government 
forbade  this  practice.  The  "bagmen"  were  shot  on 
the  way,  their  "bags"  were  confiscated.  And  still  the 
practice  continued,  and  greater  and  greater  numbers  of 
people  engaged  in  it. 

An  investigation  was  made  of  the  extent  of  these 
"bagman"  activities  in  the  Government  of  Kaluga,  one 
of  the  non-producing  provinces  of  Central  Russia,  for 
the  period  from  August  1,  1917,  to  January  1,  1918. 
Of  the  627  districts  covered  by  the  investigation,  94 


AGEICULTURE  AND  THE  PEASANTRY     249 

per  cent,  imported  grain  througli  the  agency  of  the 
"bagmen,"  and  only  six  per  cent,  were  able  to  get 
along  with  what  they  had  and  with  what  was  furnished 
by  the  governmental  agencies.  On  the  basis  of  the  fig- 
ures obtained  in  the  investigation,  it  appears  that  during 
these  five  months  over  six  hundred  thousand  trips  were 
made  by  the  ''bag-men,"  while  the  total  population  of 
the  province  was  one  and  one-half  million.  Half  of 
these  trips  were  successful,  while  the  other  half  resulted 
in  the  loss  of  the  persons  engaged  or  in  the  confiscation 
of  the  grain  they  were  bringing.  While  a  dangerous 
occupation,  the  "bagman"  trade  was  a  very  lucrative 
one :  the  cost  of  a  poud  of  rye,  for  example,  was,  on  the 
average,  counting  in  all  expenses,  19  roubles  and  40 
copecks,  while  the  "free"  selling  price  was  about  40 
roubles.  Now,  during  this  period,  the  amount  of  grain 
brought  into  the  province  by  the  "bagmen"  was  3,065,- 
730  pouds,  while  during  the  same  period  the  govern- 
mental agencies  succeeded  in  bringing  into  the  province 
only  1,156,000  pouds,  or  three  times  less  than  the  "bag- 
men." In  spite  of  the  wastefulness  of  the  process,  the 
"bagman"  trade  was  the  only  thing  that  kept  the  popu- 
lation of  the  Government  of  Kaluga  from  actually  starv- 
ing to  death.* 

A  similar  situation  existed  in  all  the  provinces  which 
do  not  raise  their  own  food  supplies,  as  well  as  in  the 
cities  and  in  the  industrial  centers.  The  peasants  stub- 
bornly refused  to  accept  the  conditions  in  which  they 
were  placed  by  the  maintaining  on  the  part  of  the 
Government  of  the  grain  monopoly,  and  the  Government 

•  Izvestiya  of  the  Kaluga  Provincial  Food  Committee,  No.  10,  quoted 
In  Moscow  8vol)oda  Rossii,  Juue  20.  1918. 


250  ECONOMICS  OF  COMMUNISM 

just  as  stubbornly  refused  to  give  up  the  monopoly. 
The  result  of  this  was  two-fold :  the  illegal  and  clandes- 
tine ''speculative"  trade  in  grain  continued  to  grow 
in  extent  and  in  the  increase  of  its  prices;  while  the 
activities  of  the  governmental  food  agencies  continued 
to  grow  less  and  less,  in  spite  of  the  first  efforts  to 
apply  force  for  the  purpose  of  obtaining  grain  from 
the  rural  districts. 

During  the  month  of  March,  1918,  the  amount  of 
grain  expected  to  be  loaded  in  various  parts  of  Russia 
for  shipment  to  the  fourteen  provinces  of  Central  and 
Northern  Russia  which  comprised  the  so-called  "Mosr 
cow  Food  District,"  was  10,260  carloads.  The  amount 
actually  loaded  was  2,268  carloads.  But  seventy-five 
per  cent,  of  the  grain  loaded  was  expected  from  the 
Governments  of  Taurida  and  Yekaterinoslav  in  South- 
ern Russia,  which  were  already  cut  otf  from  Moscow 
by  the  German  advance.  So  that  the  actual  shipments 
to  the  starving  provinces  were  very  small.* 

With  every  month  that  went  by  the  situation  grew 
worse.  During  the  month  of  April,  again  on  the  basis 
of  the  information  for  the  same  area,  only  fifteen  per 
cent,  of  the  minimum  expected  was  loaded,  and  again 
only  a  small  part  of  it  reached  its  destination.  During 
the  first  half  of  May,  1918,  only  three  per  cent,  of  the 
minimum  expected  was  loaded.  As  a  result  of  this,  the 
city  of  Moscow  received  during  the  last  two  weeks  in 
May,  only  eleven  carloads  of  grain  daily,  which  was 
five  carloads  a  day  less  than  was  needed  for  a  quarter- 
pound  daily  ration.f 

•  Bulletin  of  the  Moscow  Food  District  Committee,  No.  10. 
t  Moscow  Svoboda  Rosaii,  May  30,  1918. 


AGRICULTURE  AND  THE  PEASANTRY    251 

The  conditions  in  which  the  government  grain 
monopoly  operated  are  graphically  illustrated  by  the 
following  comparison.  The  grain  loaded  for  shipment 
by  the  governmental  food  agencies  was  purchased  at 
^'fixed"  prices,  on  the  basis  of  which  the  price  of  bread 
in  Petrograd,  for  example,  was  "fixed"  at  30  copecks 
a  pound.  At  the  same  time,  the  "free"  price  of  bread 
in  Petrograd  ^^a.s  fluctuating  between  five  and  eight 
roubles  a  pound,  and  the  prices  for  grain  paid  by  the 
"bagmen"  fluctuated  accordingly.  These  figures  refer 
to  the  beginning  of  May,  1918.* 

Thus,  during  the  first  six  months  of  the  Soviet 
regime,  the  food  crisis  was  rapidly  becoming  more  and 
more  acute.  The  Soviet  Government  made  attempts  to 
confiscate  grain  by  force,  but  usually  met  with  deter- 
mined resistance  on  the  part  of  the  peasantry.  The 
rifles  and  even  machine  guns,  as  well  as  the  supplies  of 
ammunition,  which  the  returning  soldiers  brought  from 
the  front  and  were  happy  enough  to  exchange  for  food, 
now  were  used  by  the  peasants  for  the  protection  of 
their  supplies  of  food  from  the  government  requisitions. 
Even  detachments  of  Red  Guards  sent  to  the  villages 
for  the  purpose  of  confiscating  food  were  often  met 
with  armed  resistance. 

At  the  end  of  its  first  six  months  in  power,  the  Soviet 
Government  took  its  first  really  drastic  measure  for 
the  purpose  of  solving  the  food  problem.  On  May  13, 
1918,  a  decree  was  issued  by  the  All-Russian  Executive 
Committee,  providing  for  a  number  of  measures  to  be 
taken  in  this  direction.     The  food  situation,  as  it  then 

Petrograd  Novy  Den,  May  12,  1918. 


252  ECONOMICS  OF  COMMUNISM 

presented  itself  to  the  Soviet  Government,  was  described 
in  this  decree  as  follows : 

The  ruinous  process  of  disorganization  in  the  system  of 
food  supply,  which  is  the  burdensome  legacy  of  the  four-year 
war,  continues  to  grow  in  extent  and  intensity.  While  the 
Governments  which  produce  no  grain  are  starving,  the  grain- 
producing  Governments  have  large  supplies  of  grain,  left  over 
from  the  harvests  of  1916  and  1917.  This  grain  is  in  the 
hands  of  the  rich  peasants  and  the  'Tculaki,"  the  village 
bourgeoisie.  Grown  very  wealthy  during  the  war,  well  sup- 
plied with  food  now,  the  village  bourgeoisie  remains  deaf  and 
indifferent  to  the  sufferings  of  the  starving  workmen  and  the 
poorer  peasants.  It  refuses  to  bring  its  supplies  of  grain 
to  the  places  designated  by  the  Government  in  the  hope  of 
compelling  the  State  to  raise  the  "fixed"  price  of  grain,  at 
the  same  time  selling  its  grain  to  the  "bagmen"  at  fan- 
tastically high  prices.  .  .  .  These  acts  of  violence  against  the 
starving  poor  on  the  part  of  the  holders  of  the  grain  must 
be  answered  by  acts  of  violence  against  the  bouigeoisie.  Not 
a  single  pound  of  grain  must  remain  in  the  hands  of  the 
present  holders,  except  what  is  needed  for  their  families  and 
for  seed. 

With  this  situation  in  mind,  the  Soviet  Government 
ordered  in  the  decree  that  all  grain,  held  by  the  peasants 
above  the  amounts  needed  for  their  own  consumption  and 
for  seed,  be  delivered  to  the  governmental  food  agencies 
within  one  week  after  the  publication  of  the  decree, 
to  be  paid  for  at  "fixed"  prices.  All  those  who  refused 
or  failed  to  obey  the  decree  were  to  be  declared  enemies 
of  the  people,  brought  before  revolutionary  tribunals, 
punished  by  imprisonment  for  not  less  than  ten  years, 
have  all  their  property  confiscated,  and  be  forever 
expelled  from  the  village  community. 


AGRICULTUEE  AND  THE  PEASANTRY    253 

The  poorer  elements  of  the  rural  population  were 
invited  especially  to  watch  over  the  carrying  out  of 
this  decree.  They  were  asked  specifically  to  spy  on 
their  better-to-do  neighbors  and  to  inform  the  govern- 
mental agencies  of  all  cases  of  violation.  For  this  serv- 
ice a  definite  reward  was  offered  to  them.  Paragraph 
4  of  the  decree  read  as  follows : 

In  case  excess  supplies  of  grain  are  discovered  in  any  one's 
possession,  these  supplies  must  be  confiscated  without  any 
compensation  to  the  owner,  while  the  amount  of  the  value  of 
the  confiscated  grain  at  "fixed"  price  should  be  divided  into 
two  parts :  one  half  of  this  amount  should  he  paid  to  the  per- 
son who  supplied  the  information  concerning  the  violation  of 
the  decree,  while  the  other  half  should  be  paid  out  to  the  vil- 
lage community. 

Provision  was  also  made  in  this  decree  for  the  utiliza- 
tion of  armed  force  for  the  purpose  of  requisitioning 
grain,  in  case  resistance  should  be  offered. 

S.    Class  War  in  the  Villages 

The  decree  of  May  13  was  the  first  effort  on  the  part 
of  the  Soviet  Government  to  introduce  class  war  in 
the  villages  and  use  it  as  an  instrument  for  the  solution 
of  the  food  problem.  However,  in  spite  of  the  provision 
for  the  use  of  military  force,  in  spite  of  the  severity  of 
the  punishments  for  the  violations  of  the  decree  and 
of  the  universal  system  of  espionage  bolstered  up  by 
great  inducements,  the  decree  did  not  bring  the  desired 
results.  A  month  after  the  issuing  of  this  decree, 
another  decree  was  issued,  carrying  still  farther  all  of 
the  important  provisions  of  the  first  decree,  particularly 


254  ECONOMICS  OF  COMMUNISM 

as  far  as  the  system  of  espionage  and  bribery  was  con- 
cerned. 

On  January  11,  1918,  the  Soviet  Government  issued 
the  decree  concerning  the  organization  of  the  "village 
poverty."  In  Chapter  IV  of  Part  One  we  had  occasion 
to  speak  of  the  elements  in  the  rural  population  which 
constitute  the  stratum  known  under  this  name.  The 
decree  of  June  11  for  the  first  time  defined  the  status 
of  these  elements  and  gave  its  official  sanction  to  their 
role  as  the  instruments  of  class  war  in  the  villages. 

Paragraph  2  of  the  decree  gave  a  definition  of  the 
term  "village  poverty"  from  the  point  of  view  of  legal 
status.  It  was  provided  that  in  each  village  and  rural 
community  there  should  be  organized  committees  of 
poverty.  The  right  of  voting  for  members  of  these 
committees  and  of  being  elected  to  the  committees  was 
given  to  all  the  inhabitants  of  each  community,  "with 
the  exception  of  persons  known  to  be  rich  or  to  be 
Tculaki,'  known  to  have  in  their  possession  excess  sup- 
plies of  grain  or  other  foodstuffs,  owners  of  indus- 
trial enterprises,  those  who  employ  hired  labor,  etc."  * 

The  duties  of  the  committees  of  poverty,  as  defined 
by  Paragi'aph  3  of  the  decree,  were  to  be  two-fold:  in 
the  first  place  they  were  to  have  jurisdiction  over  the 
distribution  of  the  grain,  the  articles  of  prime  neces- 
sity, and  the  agricultural  implements  supplied  by  the 
governmental  agencies  to  the  community  in  which  they 
were  operating;  and  in  the  second  place,  they  were  to 
assist  the  local  governmental  agencies  in  extracting  the 
excess  stocks  of  grain  from  the  peasants  who  still  had 

•  The  disqualifications  for  suffrage  given  in  quotations  are  in  the 
exact   wording   of  this   amazing   provision. 


AGEICULTURE  AND  THE  PEASANTRY    355 

them.  The  first  set  of  duties  was,  of  course,  really  a  set 
of  prerogatives  which  could  be  used  by  the  committees 
of  poverty  in  the  carrying  out  of  their  second  set  of 
duties.  This  weapon  in  their  hands  was  rendered  still 
more  powerful  by  Paragraph  4,  which  provided  that  the 
categories  of  persons  to  whom  the  distribution  of  grain, 
articles  of  prime  necessity,  and  agricultural  machinery, 
placed  in  the  jurisdiction  of  the  committees  of  poverty, 
should  be  made,  were  to  be  left  entirely  at  the  discretion 
of  the  committees  themselves. 

The  object  of  the  decree  was  to  get  grain  from  the 
villages.  The  following  inducements  were  offered  to  the 
committees  of  poverty  by  Paragraphs  8,  9,  and  10 : 

In  those  localities,  in  which  all  the  excess  supplies 
of  grain  would  be  extracted  from  the  hand  of  the  peas- 
ants holding  them  by  July  15,  1918,  the  committees 
of  poverty  would  receive  for  distribution  among 
the  poor  enough  grain  to  constitute  the  existing  indi- 
vidual norm,  free  of  charge.  All  the  articles  of  prime 
necessity  and  the  simple  agricultural  implements  would 
be  delivered  to  such  communities  at  50  per  cent,  of  the 
set  price.  In  the  localities,  in  which  this  process  of 
extraction  of  grain  would  not  be  completed  until 
August  15,  the  "village  poverty"  would  have  to  pay  for 
its  supply  of  grain  at  the  rate  of  50  per  cent,  of  the 
"fixed"  price,  while  the  articles  of  prime  necessity  and 
the  agTicultural  implements  would  be  delivered  with  a 
reduction  of  only  25  per  cent.  Finally,  in  the  localities 
where  the  process  would  not  be  completed  until  the  end 
of  August,  the  reduction  in  the  price  of  grain  would 
be  only  20  per  cent.,  and  in  the  price  of  articles  of  prime 
necessity  and  agricultural  implements,  15  per  cent. 


256  ECONOMICS  OF  COMMUNISM 

The  larger  and  complicated  agricultural  machinery 
and  implements,  needed  for  group  agriculture,  were 
also  to  be  placed  at  the  disposal  of  the  committees  of 
poverty,  at  prices  fixed  by  the  state,  which  would  vary 
in  accordance  with  the  zeal  and  the  energy  shown  by 
the  committee  in  each  locality  in  the  work  of  obtain- 
ing the  excess  supplies  of  grain. 

Neither  of  these  decrees,  however,  gave  any  tangible 
results.  The  total  amount  of  grain  obtained  for  distri- 
bution by  the  governmental  agencies  during  the  first 
half  of  1918  was  twenty-eight  million  pouds.  The  total 
amount  obtained  during  the  second  half  of  the  year, 
when  both  of  the  decrees  were  in  full  operation,  was 
sixty-seven  million  pouds.*  But  the  difference  repre- 
sents merely  the  normal  difference  between  the  first  half 
of  a  year  and  th.e  second,  with  probably,  in  view  of  the 
severity  of  the  methods  adopted,  a  slight  increase  as 
against  what  might  have  been  expected  without  such 
measures.  And  when  we  consider  the  fact  that  the 
territory  for  which  this  grain  was  obtained  normally 
required  the  bringing  in  from  other  parts  of  the  coun- 
try of  something  like  five  hundred  million  pouds  (a  very 
conservative  estimate),  we  can  see  the  appalling  nature 
of  the  situation,  when  viewed  only  from  the  point  of 
view  of  the  governmental  food  distributing  agencies, 
operating  under  the  system  of  grain  monopoly. 

But  even  aside  from  the  questions  arising  out  of  the 
financial  difficulties  raised  by  the  grain  monopoly,  there 
is  no  doubt  that  the  amount  of  grain  actually  in  the 
hands  of  the  peasantry  and  available  either  for  requi- 

*  These  figures  are  taken  from  Lenin's  article  on  the  food  situation, 
dated  January  26,  1919,  and  published  in  the  Moscow  Pravda. 


AGRICULTUEE  AND  THE  PEASANTRY    257 

sition  by  the  government  or  for  sale  to  the  ''bagmen" 
has  never  been  sufficient  to  cover  the  actual  needs.  The 
decrees  of  May  13  and  June  11  were  built  upon  the 
supposition  that  there  were  large  supplies  of  grain 
left  over  from  the  crops  of  1917  in  the  hands  of  the 
peasantry.  This  supposition,  however,  had  scarcely  any 
basis  in  the  facts  of  the  situation.  At  a  conference  of 
representatives  of  the  various  food  agencies  in  the 
northern  Governments  of  Russia,  held  in  Petrograd 
early  in  1918,  it  was  estimated  that  the  total  excess 
supplies  of  grain  for  the  year  1917  for  the  whole  coun- 
try was  between  520  and  560  million  pouds.  This  esti- 
mate was  based  upon  the  available  crop  reports  for  the 
year  and  a  calculation  of  consumption  at  the  average 
rate  of  three-quarters  of  a  pound  of  baked  bread  a  day. 
But  the  supplies  in  the  Caucasus  and  in  Siberia  were 
inaccessible,  which  left  only  320  million  pouds.  Over 
sixty  per  cent,  of  this  grain  was  located  in  South  Russia, 
which  was  under  German  occupation  most  of  1918; 
therefore,  also  inaccessible.*  Thus,  the  total  possible 
excess  supplies  of  grain,  left  over  from  the  crops  of 
1917,  was  130  million  pouds.  The  actual  supplies,  of 
course,  were  infinitely  less;  for  one  thing,  because  the 
peasant  consumption  during  the  first  revolutionary 
year  increased  very  considerably.  In  other  words,  in 
the  provinces  under  the  control  of  the  Soviet  Govern- 
ment in  1918,  there  could  not  possibly  have  been  any 
supplies  of  grain  left  over  from  the  preceding  year  that 
would  have  made  an  appreciable  difference  in  the 
situation. 

As  for  the  year  1918,  itself,  its  total  grain  produc- 

•  Petrograd  Novy  Den,  April  10,  1918. 


258  ECONOMICS  OF  COMMUNISM 

tion  in  the  territory  controlled  by  the  Soviet  Govern- 
ment was  very  much  less  than  in  1917.  According  to 
an  official  estimate,  the  area  left  unsown  during  the 
year  1918  was  no  less  than  four  million  desiatinas.* 
This  estimate  is  admitted  to  he  very  rough  and,  most 
probably,  very  much  under  the  actual  figure. 

But,  while  the  decrees  of  May  13  and  June  11  were 
not  in  any  measure  successful  as  means  of  obtaining 
gTain  from  the  peasants,  these  decrees  were  more  than 
successful  in  inaugurating  a  period  of  bitter  class  war 
in  the  villages.  These  decrees,  particularly  the  one  of 
June  11,  made  the  "village  poverty"  virtually  masters 
of  the  situation,  so  far  as  the  life  of  the  rural  popula- 
tion Avas  concerned.  The  two  other  classes  of  peasant 
population,  the  rich  peasantry,  and  the  middle  peasant- 
ry, i.  e.,  the  vast  bulk  of  the  peasant  population,  found 
themselves  entirely  at  the  mercy  of  their  inveterate 
enemy,  the  lazy  and  the  shiftless,  the  latter  embittered, 
moreover,  by  the  fact  that  the  hard-working  and  indus- 
trious bulk  of  the  peasant  population  had  been  all  the 
time  well  supplied  with  food,  while  the  "poverty"  was 
not.  The  class  war,  which  was  during  the  first  months 
of  the  Soviet  regime  confined  mostly  to  the  cities,  now 
passed  definitely  into  the  rural  districts,  and  found 
expression  in  a  large  number  of  armed  clashes,  par- 
ticularly between  the  "village  poverty"  and  the  middle 
peasantry. 

Since  the  committees  of  poverty  were  really  govern- 
mental administrative  institutions,  the  clashes  between 
them  and  the  bulk  of  the  peasant  population  necessarily 

•  Report  of  the  Commissar  of  Agriculture,  Sereda,  to  the  Central 
Executive  Committee,  Moscow  Izvestiya.  February  12,  1919. 


AGRICULTUEE  AND  THE  PEASANTRY    259 

took  the  form  of  peasant  uprisings.  Hundreds  of  such 
uprisings  took  place  all  through  the  territory  controlled 
by  the  Soviet  Government  during  1918.  They  had  to 
be  put  down  by  force,  and  detachments  of  Red  Guards, 
particularly  the  Letts,  were  detailed  for  this  duty. 
The  situation  finally  became  so  bad,  that  even  the 
Soviet  Government  itself  became  alarmed  at  the  results 
of  its  official  sanction  of  the  class  war  in  the  villages. 
It  began  to  make  efforts  to  liquidate  these  results  by 
placating  the  middle  peasantry,  i.  e.,  the  really  basic 
element  of  the  agricultural  population.  The  Soviet 
Government  realized  that,  while  it  was  important  to 
extract  from  the  hands  of  the  richer  peasants  whatever 
supplies  of  gi-ain  they  still  concealed,  through  the  in- 
strumentality of  the  'Village  poverty,"  the  class  war 
that  this  had  brought  about  now  threatened  to  cut  at 
the  very  foundation  of  the  whole  agricultural  life  of  the 
country:  the  class  war,  by  arousing  the  ire  and  the 
bitter  enmity  of  the  middle  peasantry,  was  rapidly 
making  for  a  still  gi'eater  contraction  of  the  sowing 
area. 

The  first  attempt  to  liquidate  the  effects  of  the  decree 
of  June  11  was  an  official  circular  order,  issued  by 
the  Soviet  Government  in  the  fall  of  1918,  explaining 
the  significance  of  the  original  decree  and  interpreting 
it  as  far  as  its  application  to  the  middle  peasantry  was 
concerned.     This  circular  order  began  as  follows : 

Information  received  from  various  parts  of  the  country 
concerning  the  manner  in  which  the  committees  of  poverty 
are  being  organized,  indicates  that  in  many  cases  the  in- 
terests of  the  middle  peasantiy  are  viohited.  The  organiza- 
tion of  the  "poverty"  is  taken  in  many  localities  to  mean  that 


260  ECONOMICS  OF  COMMUNISM 

the  "village  poverty"  should  be  opposed  to  the  rest  of  the 
peasantry,  i.e.,  both  to  the  rich  peasants  and  the  middle 
peasants. 

Then  followed  a  solemn  affirmation  on  the  part  of 
the  Soviet  Government  to  the  effect  that  it  never 
intended  to  conduct  a  war  against  the  middle  peasantry ; 
that,  on  ihe  contrary,  it  had  always  believed  that  the 
introduction  of  Socialism  was  possible  only  through  a 
union  between  the  workmen  and  the  peasants.  All  the 
local  governmental  institutions  (including,  of  course, 
the  committees  of  poverty)  were  ordered  to  bring  their 
activities  into  correspondence  with  the  general  policy 
of  the  central  authority.  The  committees  of  poverty 
were  ordered  to  be  "the  revolutionary  organs  of  the 
whole  of  the  peasantry  against  the  former  landowners, 
the  rich  'kulaki,'  the  merchants  and  the  priests,  and 
not  merely  the  organs  of  the  rural  proletariat  to  be  used 
as  instruments  of  repression  against  the  rest  of  the  rural 
population."  As  the  first  step  in  this  direction,  the 
suffrage  provisions  of  the  amazing  Paragraph  2  of  the 
decree  of  June  11  were  officially  interpreted  to  cover 
the  middle  peasantry,  which  was  invited  to  participate 
in  the  work  of  the  committees  of  poverty. 

The  mischief  done  by  six  months  of  the  officially 
sanctioned  class  war  in  the  villages  could  not  be 
repaired  so  easily.  The  food  crisis  continued  to  be 
acute,  and  was  expected  to  grow  worse  during  the  first 
half  of  1919  than  it  ever  was  in  1918.*  The  liquida- 
tion of  the  class  war  and  the  food  crisis  called  for  more 
important  and  extensive  measures.  First  of  all  it  was 
necessary,   of  course,   to   look   to  the  organization   of 

•  Lenin's  article  in  the  Moscow  Pravda,  quoted  above. 


AGEICULTUEE  AND  THE  PEASANTRY    261 

agricultural  production,  thrown  into  a  state  of  utter 
chaos  by  the  events  of  1918.  The  plan  of  agrarian 
arrangement,  put  forth  in  the  form  of  the  decree  of 
February  14,  1919  (which  we  discussed  in  detail  in 
Chapter  IV  of  Part  One),  was  the  most  important  of 
these  measures.  But  the  success  of  this  measure  or  of 
any  attempt  at  a  reorganization  of  agricultural  produc- 
tion depended  entirely  upon  the  attitude  and  the 
response  of  the  great  masses  of  the  peasantry,  the  agri- 
cultural producers,  or  using  the  terminology  of  the 
Bolshevist  classification,  the  middle  peasantry. 

Jf..    The  Middle  Peasantry 

The  situation  which  existed  in  the  villages,  from 
the  point  of  view  of  the  attitude  of  the  different  elements 
among  the  peasants  toward  the  events  that  were  tran- 
spiring, may  be  seen  very  clearly  from  a  number  of 
interesting  documents  published  in  the  Soviet  press  at 
the  time  of  the  promulgation  of  the  decree  of  February 
14.  In  the  Moscow  Izvestiya  of  February  2,  1919, 
there  appeared  a  letter  signed  by  G.  Gulov,  and  written, 
according  to  the  editorial  note  which  accompanied  it, 
by  a  peasant.  This  letter  purported  to  give  the  general 
views  of  the  peasants,  particularly  of  the  poorer  and 
the  middle  classes. 

The  position  of  the  "village  poverty"  was  presented 
in  this  letter  as  very  difficult,  because  in  spite  of  the  as- 
sistance on  the  part  of  the  Soviet  Government,  the 
poorer  peasants  still  could  not  organize  their  life  on  a 
rational  basis.  The  governmental  subsidy  was  given  in 
money,  with  which,  however,  it  was  almost  impossible 


262  ECONOMICS  OF  COMMUNISM 

to  purchase  any  of  the  things  that  the  peasants  need  in 
order  to  start  in  agriculture. 

The  position  of  the  middle  peasantry,  on  the  other 
hand,  was  represented  as  being  potentially  much  better, 
because  practically  the  whole  technical  equipment  in  the 
form  of  implements,  live  stock,  etc.,  was  in  their  hands. 
But  their  attitude  toward  the  Soviet  Government  was 
one  of  hostility.  They  complained  that  they  were  being 
classed  together  with  the  richer  classes  for  purposes  of 
persecution  on  the  part  of  the  poorer  classes,  yet  ordered 
to  work  together  with  these  soTno  •p'^nrpr  olo?^se'=!  whpn  i+ 
came  to  actual  agricultural  work.  Moreover,  there  was 
an  almost  universally  spread  notion  among  the  middle 
peasantry  that  there  was  a  strong  division  of  opinion 
among  the  Communist  leaders  as  to  their  views  on  the 
middle  peasantry.  The  peasants  in  many  localities 
were  certain  that  Lenin  was  for  them,  considering 
them  friends  of  the  Soviet  Government,  while  Trotsky 
was  against  them  and  was  organizing  the  Red  Army 
for  the  purpose  of  conducting  a  war  against  the  middle 
peasantry. 

Whether  or  not  this  letter  was  really  written  by  a 
peasant  or  was  merely  an  agitation  device,  it  served 
as  an  excellent  opportunity  for  the  Soviet  leaders  to 
address  appeals  to  the  middle  peasantry.  Such  appeals 
were  published  in  the  form  of  two  open  letters, 
addressed  to  the  peasantry,  one  signed  by  Lenin,  and 
the  other  by  Trotsky,  which  were  followed  by  numerous 
articles  by  the  most  prominent  of  the  Soviet  publicists. 

Lenin's  letter,*  denying,  of  course,  the  existence  of 
any  difference  of  opinion  between  him  and  Trotsky, 

•  Published  In  Moscow  Izvestiya,  February  15,  1919. 


AGRICULTUEE  AND  THE  PEASANTRY     263 

defined  very  concisely  the  attitude  of  the  Soviet  Gov- 
ernment toward  the  various  elements  among  the  peas- 
antry : 

There  has  not  been  a  single  decree  or  order  issued  by  the 
Soviet  Government,  in  which  a  difference  would  not  be  made 
among  the  three  groups  of  the  peasantry.  The  first  group 
is  the  "village  poverty"  (the  proletarians  and  the  semi-pro- 
letarians, as  they  say  in  the  science  of  economics).  This 
group  is  very  numerous.  When  the  capitalists  and  the  land- 
owners were  in  power,  the  largest  burden  of  their  oppression 
had  to  be  borne  by  the  poor.  In  all  the  countries  of  the 
world,  the  best  support  of  the  Socialist  movement  is  found 
in  the  workmen  and  the  village  poor.  The  second  group 
consists  of  the  "kulaki,"  i.e.,  the  rich  peasants,  who  exploit 
other  men's  labor,  either  by  hiring  labor  or  by  lending  money 
at  high  interest,  or  in  any  other  way.  This  group  is  entirely 
with  the  landowners  and  the  capitalists,  with  the  enemies  of 
the  working  class.  The  third  group  is  the  middle  peasantry. 
They  are  not  the  enemies  of  the  Soviet  Government.  They 
can  be  our  friends,  and  that  is  what  we  are  striving  for. 

Further  on  in  his  letter,  Lenin  took  up  the  various 
complaints  v^hich  came  from  the  middle  peasantry  from 
all  over  the  country.  The  first  group  of  complaints  was 
concerned  with  the  ''excessively  formalistic,  non- 
democratic  and  in  many  cases  simply  impermissible 
attitude  of  the  local  administrative  institutions  toward 
the  middle  peasantry."  Lenin  promised  to  remove  the 
causes  of  these  complaints,  explaining  that  it  is  very 
difiicult  for  the  central  authority  to  control  the  local 
administrative  bodies,  especially  when  they  are  far 
away  from  the  center  of  Govei'nment. 

The  second  set  of  complaints  was  concerned  with  the 
question  of  the  grain  monopoly.     On  this  point  Lenin 


264  ECONOMICS  OF  COMMUNISM 

assured  the  peasants  tJiat  the  Soviet  Government  would 
not  give  up  its  position,  that  "free"  trade  in  grain  would 
not  be  permitted,  because  such  trade  would  simply  lead 
to  the  enrichment  of  a  few  at  the  expense  of  many. 
But  he  urged  upon  the  peasants  that  they  should  con- 
sider it  their  duty  to  give  up  to  the  governmental 
agencies  charged  with  the  task  of  gathering  food  sup- 
plies whatever  excess  supplies  they  had  at  the  prices 
set  by  the  Soviet  Government. 

Trotsky's  letter,*  written  in  his  characteristic  style, 
full  of  such  expressions  as  "liars,"  "scoundrels," 
"traitors,"  "fools,"  etc.,  addressed  to  the  opponents  of 
the  Soviet  regime,  also  assured  the  peasants  that  there 
was  no  difference  of  opinion  between  him  and  Lenin  or, 
for  that  matter,  among  any  leaders  of  the  Communist 
Party,  when  it  came  to  their  attitude  toward  the  peas- 
antry. Trotsky  defined  the  middle  peasantry  as  the 
group  "standing  between  the  'kulaki'  and  the  poverty, 
with  its  one  wing  adjoining  the  proletariat,  with  its 
other  merging  with  the  bourgeoisie."  Under  normal 
conditions,  the  middle  peasantry  ought  to  be  a  friend 
of  the  Soviet  Government.  For,  while  the  Soviet  Gov- 
ernment was  and  always  will  be  in  favor  of  the  Com- 
munistic system  of  agriculture,  it  "does  not  compel 
and  never  intends  to  compel  (Trotsky's  own  italics)  the 
middle  peasantry  to  change  to  the  Communistic  forms 
of  land  tilling." 

As  for  the  reports  that  the  Eed  Army  was  recruited 
for  the  purpose  of  fighting  the  middle  peasantry,  Trot- 
sky assured  the  peasants  that  "such  statements  could 
be  made  only  by  idiots  or  by  scoundrels."     While  it 

•  Published  in  Moscow  Izvestiya,  February  7,  1919. 


AGEICULTUEE  AND  THE  PEASANTRY    265 

was  true  that  in  some  of  their  actions  the  separate  de- 
tachments of  the  Red  Army  did  hurt  the  interests  of 
the  middle  peasantry,  but  that  was  due  to  lack  of 
discipline,  not  to  policy  on  the  part  of  the  Government 
or  of  the  leaders. 

In  their  letters,  the  two  chief  leaders  of  Communism 
and  the  guiding  spirits  of  the  Soviet  regime  appealed 
to  the  middle  peasantry  to  support  the  Soviet  Govern- 
ment. Taken  in  conjunction  with  the  decree  of  Febru- 
ary 14  and  with  the  dozens  of  articles  that  were  devoted 
to  the  subject  in  the  whole  Soviet  press  for  weeks  after 
that,  these  letters  constitute  the  most  elaborate  scheme 
of  agitation  ever  used  for  any  one  purpose  by  the  Soviet 
regime. 

In  this  mass  of  documents  there  was  one  that 
deserves  special  attention.  It  was  a  reply  to  Gulov's 
letter,  also  presumably  written  by  a  peasant,  discussing 
some  of  the  phases  of  the  attitude  of  the  middle  peas- 
antry toward  the  question  of  the  communes  and  other 
forms  of  the  Communistic  agrarian  scheme,  already  in 
existence  to  some  extent  long  before  the  decree  of  Feb- 
ruary 14,  1919.  The  author  of  this  letter*  was 
inclined  to  discount  the  lack  of  technical  equipment  as 
the  cause  which  prevented  the  peasantry  from  organ- 
izing the  rural  communes  on  a  larger  scale.  He  thought 
that  the  reasons  were  much  deeper  and  lay  in  the 
psychology'  of  the  people.     He  said : 

Whenever  I  have  occasion  to  discuss  the  question  of  the 
communes  with  the  peasants,  I  hear  the  same  replies :  "How 
will  I  go  into  the  commune  with  Peter  or  with  Ivan,  when 
they  have  nothing  at  all,  while  I  have  my  farm  all  fixed  up? 

*  V.  Sarykln,  Moscow  Izvestiya,  February  9,  1919. 


266  ECONOMICS  OF  COMMUNISM 

And  besides,  I  am  a  hard  worker  and  will  do  my  work  any- 
where, and  they  did  not  want  to  work  even  fo,r  themselves 
when  they  had  a  chance,  how  will  they  work  for  the  com- 
mune? I  and  people  like  me  will  have  to  do  the  whole  work 
ourselves."  Some  would  say  to  me :  "Father  and  son  cannot 
get  along  together,  but  divide  up  their  property.  How  are 
strangers  going  to  get  along?"  And  almost  everywhere  I 
hear:  "We  shall  agree  to  anything.  We  are  ready  to  sup- 
port the  Bolsheviki.     Only  do  not  'put'  us  into  communes." 

When  the  attitude  toward  the  communes  was  such, 
that  joining  them  seemed  to  the  middle  peasantry 
almost  like  being  put  into  prison,  there  is  little  wonder 
that  the  agrarian  Communistic  forms  took  no  root 
among  the  hard-working  middle  peasantry.  What  these 
forms  are  we  already  saw  in  Part  One,  as  well  as  some 
of  the  general  results  of  the  attempts  to  introduce 
them.  Presently  we  shall  come  to  a  number  of  very 
interesting  and  characteristic  details  of  the  process. 

5.    The  Villo.ge  Against  the  City 

In  a  speech  on  the  food  situation,  delivered  on  Janu- 
ary 17,  1919,  at  a  united  meeting  of  the  All-Russian 
Executive  Committee,  the  Moscow  Soviet,  and  the  All- 
Russian  Congress  of  Trade  Unions,  Lenin  spoke  of  the 
food  supply  policy  of  the  Soviet  Government  as  having 
passed  through  three  stages  of  development.  The  first 
stage  was  the  organization  of  the  "village  poverty"  for 
the  purpose  of  extracting  the  excess  supplies  of  grain; 
the  second  stage  was  the  utilization  of  the  cooperative 
organizations  for  the  purpose  of  obtaining  grain  from 
the  villages;  the  third  stage,  at  that  time  still  in  the 
process  of  organization,  was  the  system  of  food  detach- 


AGEICULTUEE  AND  THE  PEASANTRY    267 

ments,  sent  from  the  cities  to  the  niral  districts  for  the 
purpose  of  requisitioning  the  excess  supplies  of  grain 
from  the  peasants.* 

The  first  of  these  stages  was  an  attempt  to  utilize 
the  forces  available  for  the  work  of  obtaining  grain 
in  the  midst  of  the  rural  population  itself.  What  the 
results  of  these  attempts  were,  we  have  already  seen. 

The  second  stage  was  an  attempt  to  use  the  inter- 
mediary of  a  purchasing  organization  in  the  hope  that 
in  this  way  the  hostility  shown  by  the  peasants  toward 
the  governmental  agencies  in  the  matter  of  giving  up 
their  excess  supplies  of  grain  would  be  eliminated.  In 
August,  1918,  when,  on  top  of  the  provisions  made  in 
the  decrees  of  May  13  and  June  11,  the  Soviet  Govern- 
ment, by  another  decree,  made  it  compulsory  for  the 
peasants  to  sell  at  "fixed"  prices  all  their  available 
supplies  of  grain  above  set  norms  of  consumption  and 
seed  supply,  the  cooperative  organizations  were  made 
quasi-governmental  institutions  of  distribution  and 
were  included  in  the  number  of  agencies  through  which 
the  peasants  were  obliged  to  make  the  prescribed  sale. 

But  these  cooperative  organizations  were  still  oper- 
ating in  conditions  of  the  government  grain  monopoly 
and  were  subject  to  all  the  limitations  imposed  by  it. 
The  leaders  of  the  cooperative  movement  insisted  that 
it  was  impossible  to  introduce  any  improvement  into 
the  situation  unless  the  policy  of  "fixed"  prices  was 
either  given  up  entirely  or  at  least  radically  modified. 
In  March,  1919,  a  conference  was  held  in  Moscow, 
which  was  devoted  to  this  question.  S.  Maslov,  the 
well-known  leader  of  the  cooperative  movement,   pre- 

•  Petrograd  Severnaya  Communa,  January  21,  1919, 


268  ECONOMICS  OF  COMMUNISM 

sented  a  report  to  this  conference,  in  which  he  demon- 
strated that  the  whole  food  supply  policy  of  the  Soviet 
Government,  based  on  ''fixed"  prices  under  a  govern- 
ment grain  monopoly,  merely  resulted  in  a  progressive 
decreasing  of  agricultural  production.  He  and  the 
other  representatives  of  the  cooperative  movement 
insisted  that  the  only  measure  on  the  part  of  the  central 
authority  that  could  possibly  stimulate  agricultural  pro- 
duction, was  the  immediate  increase  of  the  "fixed" 
prices.  The  representatives  of  the  various  departments 
of  government,  the  Commissariats  of  Agriculture  and 
Supplies  and  the  Supreme  Council  of  National 
Economy,  who  took  part  in  the  conference  and  in  the 
discussions  which  followed  Maslov's  report,  disagreed 
entirely  with  the  cooperators  and  insisted  that  the 
government  policy  was  the  right  one  and  should  be 
continued.* 

The  third  stage  in  the  development  of  the  food  supply 
policy  of  the  Soviet  Government  represents  an  attempt 
to  make  use  of  a  force  recruited  in  the  city  and  directed 
from  it  for  the  purpose  of  dealing  with  the  problem  of 
obtaining  grain  in  the  villages.  The  system  of  food  de- 
tachments by  means  of  which  this  was  to  have  been  car- 
ried out  began  to  be  built  up  in  1918,  when  a  decree  was 
issued  by  the  Council  of  People's  Commissaries, 
empowering  large  labor  organizations,  such  as  unions 
of  railroad  workers,  etc.,  factory  committees,  and 
municipal  and  county  Soviets  to  organize  and  send  to 
the  grain-producing  provinces  special  food  detachments 
for  the  purpose  of  purchasing  grain  from  the  middle 

•  Moscow  Izvestiya,  March  4,  1920. 


AGRICULTUEE  AND  THE  PEASANTRY     269 

peasantry  at  ''fixed"  prices  and  requisitioning  it  from 
the  richer  peasants. 

This  decree,  however,  did  not  specify  the  manner  in 
which  such  detachments  should  have  been  organized, 
nor  the  methods  which  they  were  to  pursue  in  their 
work.  The  only  features  of  the  plan  that  were  specified 
in  the  decree  were  concerned  with  the  manner  of  the 
disposition  of  the  grain  obtained  and  with  the  question 
of  the  responsibility  of  the  detachments  for  any  illegal 
actions.  On  the  first  point  it  was  provided  that  half 
of  the  grain  obtained  by  each  food  detachment  should 
be  shipped  to  the  province  from  which  the  detachment 
was  sent  and  placed  there  at  the  disposal  of  the  pro- 
vincial food  distributing  agencies,  while  the  other  half 
should  be  left  at  the  disposal  of  similar  agencies  in  the 
province  in  which  the  food  detachment  operated.  Con- 
cerning the  second  point,  the  food  detachments  were 
made  responsible  in  their  work  to  the  food  adminis- 
tration organs  of  the  province  from  which  they  were 
sent.  If  any  detachment  attempted  to  purchase  grain 
at  prices  higher  than  the  ''fixed"  prices,  or  refused  to 
submit  to  control  on  the  part  of  the  administrative 
organs  to  which  they  were  made  responsible,  or  com- 
mitted any  other  acts  in  violation  of  the  decree,  the 
grain  which  they  had  gathered  could  be  confiscated  by 
the  state,  while  the  leaders  of  the  detachment  could  be 
placed  on  trial  before  a  revolutionary  tribunal,  charged 
with  counter-revolutionary  activities. 

Early  in  1019  the  system  of  food  detachments  estab- 
lished by  this  decree  was  considerably  changed  and  more 
definite  forms  of  organization  were  introduced.  The 
whole   system   was   placed    under   the    control   of   the 


270  ECONOMICS  OF  COMMUNISM 

Military  Food  Supply  Bureau,  which,  in  conjunction 
with  the  People's  Commissariat  of  Food  Supplies,  in 
whose  jurisdiction  the  food  detachments  originally 
were,  worked  out  the  following  rules  for  the  formation 
and  detailing  of  food  detachments : 

Each  detachment  should  consist  of  twenty-five  men, 
one  commissar  and  his  assistant.  These  detachments 
should  be  formed  by  factory  committees  or  Communist 
party  organizations  and  should  consist  only  of  work- 
men known  to  be  trustworthy.  The  commissar  and  his 
assistant  should  be  confirmed  by  the  local  council  of 
trade  unions  or  the  local  Soviet.  After  being  appointed, 
the  commissar  of  each  detachment  should  immediately 
present  himself  at  the  local  division  of  the  Military 
Food  Supply  Bureau,  where  he  is  given  full  instruc- 
tions concerning  the  destination  and  the  work  of  his 
detachment. 

All  members  of  the  food  detachments  continue  to  be 
on  the  payi'oll  of  the  factory  from  which  they  are  taken, 
receiving  during  the  time  of  their  absence  wages  equal 
to  their  average  pay.  Moreover,  upon  leaving,  each 
member  of  the  detachment  receives  money  at  the  rate 
of  fifteen  roubles  a  day  for  his  traveling  expenses  for  ten 
days.  Upon  its  arrival  at  the  point  of  destination,  the 
detachment  must  report  to  the  local  Provincial  Food  Ad- 
ministration, which  thenceforward  assumes  all  expenses 
for  the  maintenance  of  the  detachment.  The  period  for 
which  a  detachment  is  recruited  is  three  months,  and 
during  that  time  its  members  are  considered  to  be  at 
the  disposal  of  the  Military  Food  Supply  Bureau. 
They  cannot  leave  their  posts  of  their  own  accord  and 
must  make  a  report  concerning  their  work  at  least  twice 


AGEICULTUEE  AND  THE  PEASANTRY     271 

a  month.  Two  and  one-half  months  after  the  forma- 
tion of  a  food  detachment,  the  factory  from  which  it 
was  recruited  must  form  another  detachment,  which 
would  he  able  to  take  the  place  of  the  one  finishing  its 
duty.* 

How  do  the  peasants  react  to  this  system  of  obtaining 
grain  ?  In  commenting  upon  the  manner  in  which  the 
system  works,  a  Soviet  writer  f  states  that  the  majority 
of  the  peasantry  regards  the  work  of  the  food  detach- 
ments in  the  same  manner  in  which  they  had  formerly 
regarded  the  work  of  the  tax  collectors.  The  requisi- 
tioning of  their  excess  supplies  of  grain  at  "fixed" 
prices  is  considered  by  the  peasantiT'  as  an  even  more 
onerous  burden  than  the  oppressive  taxes  of  the 
Imperial  regime.  As  a  result,  the  peasants  "protest 
strenuously  against  the  requisitioning  of  the  excess 
supplies  by  the  governmental  agencies,  and  sometimes 
even  rise  in  revolt  against  this  system  of  food  gath- 
ering." 

The  system  of  requisitioning  as  described  by  the  same 
writer  is  as  follows:  the  local  food  administration 
organs  designate  a  day,  upon  which  the  peasants  of  a 
given  village  must  deliver  to  a  certain  place  all  their 
excess  supplies  of  grain.  If  this  order  is  complied  with, 
then  the  village  receives  a  paper  from  the  local  Execu- 
tive Committee  of  the  Soviet,  certifying  to  that  effect 
and  rendering  the  village  immune  from  a  raid  by  a 
food  detachment.  If,  however,  the  order  is  not  com- 
plied with,  then  the  food  detachment  is  sent  to  the  vil- 
lage and  does  its  work  of  requisition.     From  his  per- 

•  Moscow  Izvestiya,  March  4,   1919. 

t  Klyavs-Klyavin,  Petrograd  Pravda,  January  3,  1920. 


273  ECONOMICS  OF  COMMUNISM 

sonal  observation,  the  writer  notes  that  in  many  locali- 
ties the  village  communities  have  come  to  a  realization 
that  it  is  more  advisable  for  them  to  give  up  voluntarily 
the  amount  asked  of  them  and  not  v^^ait  for  the  arrival 
of  the  food  detachments.  And  he  notes,  too,  that  in 
many  places  the  authorities  and  the  food  detachments 
are  displeased,  rather  than  gratified,  when  villages  give 
up  their  excess  grain  voluntarily :  they  prefer  to  have 
the  food  detachments  do  their  work. 

When  we  turn  to  the  statistics  of  the  food  situation, 
we  find  Lenin's  prediction  concerning  the  expected 
lack  of  improvement  during  the  year  1919  fully  borne 
out.  Taking  the  twelve  grain-producing  provinces 
under  the  direct  control  of  the  Soviet  Government  for 
the  year  from  September,  1918,  to  September, 
1919,  we  find  that  the  amount  of  grain  actually 
obtained  by  the  governmental  agencies  by  all  the  three 
methods  which  we  have  just  discussed,  was  69,514,000 
pouds  of  food  grain,  which  constituted  but  42.5  per 
cent,  of  the  amount  expected  by  the  central  Government. 
If  the  original  official  estimate  of  the  amount  of 
grain  which  these  provinces  could  have  furnished  over 
and  above  what  they  needed  for  themselves  was  correct, 
then  it  is  clear  that  the  peasants  of  the  provinces  in 
question,  in  spite  of  all  the  drastic  and  truly  terrifying 
measures  taken  by  the  Soviet  Government,  succeeded 
in  hiding  and,  most  probably,  selling  to  "speculators" 
at  very  high  prices,  at  least  as  much  grain  as  was 
requisitioned  from  them  by  the  governmental  agencies. 
And  it  is  more  than  probable  that  they  concealed  much 
greater  amounts.  In  some  of  the  provinces  the  amount 
of  grain  delivered  to  the  Government  was  as  high  as  84 


ACxRICULTUEE  AND  THE  PEASANTRY     273 

per  cent,  of  the  amount  demanded ;  but  in  some,  it  fell 
as  low  as  21  per  cent.* 

By  January  1,  1921,  only  a  little  over  two  hundred 
million  pouds  of  gi-ain  and  fodder  were  gathered, 
instead  of  four  hundred  million  that  the  Government 
expected  to  get  during  the  preceding  season.f 

This  is  the  response  of  the  village  to  the  attempts  on 
the  part  of  the  Soviet  authorities,  which  the  peasants 
identify  with  the  city  generally,  to  obtain  grain  from 
the  peasantry  on  terms  prescribed  to  it  by  the  city. 

6.     The  Basic  Paradox 

It  was  not  until  after  a  year  had  passed  since  the 
Soviet  regime  began  its  career  in  Russia,  that  it  began 
to  realize  fully  the  importance  of  the  problem  it  faced 
with  regard  to  agricultural  production  and  the  peasant- 
ry. The  vital  thing,  of  course,  wrs  agricultural  pro- 
duction, for  upon  it  depended  the  food  supply  and, 
therefore,  the  very  life  of  the  country.  And  yet  pre- 
cisely in  this  domain  of  its  activities,  the  Soviet  regime 
found  that  neither  the  predictions  of  the  theory  nor  the 
hopes  of  the  leaders  happened  to  materialize. 

At  the  beginning  of  1919,  when  the  Soviet  regime 

•  Article  by  Kiy,  Petrograd  Izvestiya,  November  3,  1919. 

t  Moscow  Bednota,  January  16,  1921.  In  commenting  on  the  situa- 
tion, ttie  newspaper   says   editorially : 

"The  gathering  of  grain  and  fodder  should  have  ended  by  now. 
But  it  is  not  over.  That  means  that  we  must  continue  to  worlf.  And 
here  is  what  that  signifies  :  Over  thirty  thousand  workmen  have  already 
been  taken  into  the  food  detachments.  They  came  from  the  factories  and 
the  foundries.  These  thirty  thousand  eat  their  bread  without  doing 
anything.  And  they  cannot  get  back  to  work,  for  the  peasants  abso- 
lutely refuse  to  give  up  their  allotments  of  grain  until  the  detachments 
arrive.  And  so  new  thousands  have  to  be  added  to  the  thousands 
already   taken    away    from    their   work." 


274  ECONOMICS  OF  COMMUNISM 

definitely  gave  up  its  attempts  to  use  class  war  as  an 
instrument  for  solving  the  problems  of  food  supply  and 
agricultural  production  generally  and  began  making 
desperate  efforts  to  enlist  the  friendship  of  the  middle 
peasantry,  the  basic  paradox  of  the  situation  became 
more  apparent  than  ever  before:  the  status  of  the 
peasantry  refuses  to  fit  into  the  class  theory.  In  this 
regard,  the  Soviet  regime  faces  the  same  problem  as  in 
regard  to  the  managing  and  the  technical  personnel  in 
industry,  but  on  a  vastly  more  fundamental  and  exten- 
sive scale.  Lenin  expressed  this  very  concisely  in  his 
report  on  the  attitude  toward  the  middle  peasantry, 
presented  to  the  Eighth  Congress  of  the  Eussian 
Communist  Party :  * 

The  proletariat,  taken  in  its  mass,  is  for  Socialism;  the 
bourgeoisie,  also  taken  as  a  mass,  is  against  Socialism.  The 
relations  between  these  two  classes  are  easy  enough  to  de- 
fine. But  when  we  deal  with  a  group  like  the  middle  peas- 
antry, we  find  ourselves  face  to  face  with  a  class  which  has 
not  decided  views.  A  middle  peasant  is  a  property  owner, 
as  well  as  a  toiler  on  the  land.  He  does  not  exploit  other 
workmen.  For  decades  he  had  felt  the  oppressive  exploita- 
tion of  the  landowners.  But  at  the  same  time  he  is  himself 
a  property  owner. 

What  is  the  way  out  of  this  paradox?  The  Com- 
munist theory  called  for  the  neutralization  of  the 
peasantry.  But  that  was,  at  best,  only  temporary. 
The  way  events  shaped  themselves  in  Russia  after  the 
Soviet  regime  came  into  power,  the  neutralization  went 
to  pieces  on  the  rocks  of  the  state  grain  monopoly  and 
the  consequent  contraction  of  agricultural  production 

•  Petrograd    Pravda,    April    5,    1919. 


AGEICULTURE  AND  THE  PEASANTRY    275 

and  the  food  crisis.  That  was  the  first  experience  of 
the  Soviet  regime  with  the  peasantry.  It  did  not  lead 
out  of  the  paradox,  but  deeper  into  it. 

The  second  experience  was  the  class  war,  the  pitting 
of  the  "village  poverty"  against  the  rest  of  the  peasantry. 
But  the  "village  poverty"  proved  to  be  a  poor  ally  for 
the  Soviet  regime  from  the  point  of  view  of  agricultural 
production.  At  best,  it  could  be  used  only  for  adminis- 
trative work,  as  a  sort  of  local  police.  Moreover,  an 
interesting  thing  happened  in  the  course  of  the  class 
war  in  the  villages.  While  formally  masters  of  the 
situation  in  the  villages,  the  committees  of  poverty  in 
reality  found  themselves  powerless  in  the  face  of  the 
passive  resistance  on  the  part  of  the  bulk  of  the  peasant 
population.  The  poorer  peasant  elements  found  out 
soon  enough  that  they  were  no  match  economically  for 
the  hard-working  masses  of  the  middle  peasantry.  And 
in  the  natural  course  of  events,  instead  of  inculcating  a 
proletarian  psychology  in  the  masses  of  the  peasantry, 
as  had  been  expected  of  them  by  the  Communist  leaders, 
the  "village  poverty"  became  gradually  assimilated  with 
the  middle  peasantry,  acquiring  its  psychology. 
Through  the  persecutions,  the  hardships,  and  the 
embitterment  of  the  class  war,  the  middle  peasantry 
has  come  out  victorious,  and  now  as  never  before  holds 
the  power  in  the  rural  life  of  Russia.  The  village  has 
now  become  what  might  be  justly  characterized  as  "the 
kingdom  of  the  middle  peasantry,"  imbued  with  a 
purely  bourgeois  psychology.* 

In  this  "kingdom  of  the  middle  peasantry"  there  is 

•  This  conclusion  is  stated  franltly  by  N.  Oasinsky,  a  Soviet  econ- 
omist, in  Moscow  Pravda,  September  5,  1920. 


276  ECONOMICS  OF  COMMUNISM 

no  room  for  the  Communistic  agrarian  forms,  which 
the  Soviet  regime  attempts  to  introduce  by  means  of 
the  decree  of  February  14,  1919.  The  Soviet  leaders 
now  frankly  admit  that  the  peasants  "have  decidedly 
rejected  the  rural  commune,"  and  have  proven  to  be 
"very  indifferent  toward  Socialism."  *  The  only  form 
of  collective  agriculture  that  the  peasants  accept  is  that 
of  the  agricultural  associations  of  various  types.  The 
following  figures  show  the  situation  in  this  regard  for 
several  provinces: 

Table  No.  2 

A.     The  Agricultural  Collectives  in  the  Government  of 
Ivanovo-V oznesensh  f 

December  1,  1919  April  1,  1920 

No.  of  No.  of   No.  of    No.  of  No.  of    No.  of 
units  "eaters"  desiatin  units  "eaters"  desiatin. 
Communes        45       1,473       3,044  32        1,269      2,547^ 

Associations    197     21,144      2,898^       274      29,762       6,654i 

Total       242     22,617       5,942^       308       31,031       9,202 

B.     The    Agricultural    Collectives    in    the    Government    of 

Tambov  X 

Communes     Associations 

January  1,  1919 • 20  59 

April        "      "      48  169 

January  1,  1920 48  192 

April        "      "      33  295 

Both  parts  of  Table  No.  2  indicate  a  definite  ten- 
dency towards   a   decrease   of  the  communes   and  the 

•  Moscow  Pravda,  September  5,   1920. 
t  Ekonomicheskaya  Zhisn,  June   3,   1920. 
i  Ibid.,   May  27,   1920. 


AGEICULTURE  AND  THE  PEASANTEY    277 

increase  of  the  agricultural  associations.  They  are  both 
representative  of  the  situation  for  the  whole  country, 
since  Part  A  may  be  taken  as  indicative  of  the  situa- 
tion in  the  provinces  which  are  not  classified  as  grain- 
producing,  while  Part  B  is  similarly  indicative  of  the 
situation  in  the  grain-producing  provinces.  But  even 
with  the  increase  of  the  number  of  associations,  the 
progress  of  large-scale  agricultural  production  is  very 
slow. 

The  productivity  of  the  Soviet  estates  and  of  the 
agricultural  collectives  is  higher,  as  a  general  thing, 
than  that  obtained  by  the  individual  farmers.  The  rela- 
tive ratio  for  a  typical  province  may  be  seen  from  the 
following : 

Table  No.  3 

Crops  in  the  Government  of  Smolensk  * 

Spring,  1920 

Eye  Oats  Barley 

Individual   Peasant    100  100                 100 

Agricultural  Collectives 142  121                112 

Soviet   Estates    165  120                150 

And  yet  these  figures  do  not  indicate  anything  that 
might  serve  as  an  inducement  for  individual  peasant- 
farmers  to  change  from  their  present  methods  to  those 
of  collective  work.  In  the  report  from  which  the 
figures  in  Table  No.  3  are  taken,  we  find  the  statement 
that  all  of  the  Soviet  estates  and  most  of  the  collectives 
are  on  land  that  formerly  constituted  large  estates.  In 
other  words,  the  system  of  providing  the  Communistic 
agrarian  forms  with  the  best  land  had  been  carried  out 

•  Ekonomicheskaj/a  Zhisn,  July   7,   1920. 


278  ECONOMICS  OF  COMMUNISM 

in  the  Government  of  Smolensk.  Normally,  according 
to  the  report  we  are  quoting,  the  crops  on  the  estates 
were  over  50  per  cent,  larger  than  on  the  peasant  land 
in  the  vicinity.  Taking  this  into  account,  the  ratio 
between  the  crops  of  the  individual  peasants  and  the 
collectives  is  not  in  favor  of  the  latter ;  while  a  similar 
ratio  between  the  crops  of  the  individual  peasants  and 
the  Soviet  estates,  which  are  located  on  the  very  best 
land,  shows  that  the  latter  are  scarcely  able  to  hold 
their  own,  when  judged  by  the  pre-revolutionary  stand- 
ards of  production. 

And  the  peasants  are,  apparently,  quick  enough  to 
recognize  this  fact.  In  the  Government  of  Tver,  for 
example,  at  the  beginning  of  1920,  there  were  137 
communes  and  190  associations,  with  a  total  of  13,000 
"eaters"  and  28,386  desiatinas  of  land.*  For  pur- 
poses of  determining  relative  productivity,  the  report 
from  which  these  figures  are  taken  compares  the  pro- 
duction of  these  commimes  and  associations  with  that 
of  a  district,  in  which  there  are  no  collectives,  and  which 
has  a  population  of  11,000  "eaters."  The  crops  gath- 
ered by  the  district  are  scarcely  sufficient  to  feed  the 
population  for  ten  months  of  the  year,  while  those 
gathered  by  tJie  collectives  provide  for  their  own  mem- 
bers and  even  have  an  excess  supply.  The  report  states 
that  the  attitude  of  the  rank  and  file  of  the  peasantry 
towards  the  collectives  is  "inimical,  particularly 
towards  those  which  are  located  on  the  former  large 
estates." 

It  is  obvious,  therefore,  that  the  attempts  at  the 
introduction  of  the  Communistic  or  qua  si- Communistic 

•  Ekonomicheskaya   Zhisn,  January   11,   1920. 


AGRICULTUEE  AND  THE  PEASANTRY    279 

agrarian  forms  also  do  not  lead  out  of  the  paradox,  but, 
if  anywhere,  still  deeper  into  it.  For  the  agricultural 
associations  are  but  a  very  small  step  nearer  to  Com- 
munism in  agriculture  than  the  system  of  individual 
holdings. 

Moreover,  considering  the  relative  quality  of  land 
allotted  to  each  form  of  agriculture  and  considering  also 
the  extent  of  governmental  aid  to  the  Communistic  and 
quasi-Communistic  agrarian  forms,  it  is  a  matter  of 
great  doubt  which  form,  the  collective  or  the  individual, 
has  greater  advantages  from  the  point  of  view  of  agri- 
cultural production,  when  judged  on  the  basis  of  the 
figures  officially  published.  Thus,  coupled  with  the 
basic  paradox,  the  agricultural  situation  still  presents 
for  the  Soviet  regime  the  dilemma  it  has  faced  since 
the  very  beginning,  viz.,  how  to  get  agricultural  pro- 
duction and  consequently  food  supplies  for  the  cities 
and  the  non-grain-producing  provinces,  preserving  at 
the  same  time  the  system  of  grain  monopoly  and  "fixed" 
prices. 

In  this  respect,  just  as  with  the  question  of  labor  in 
the  industrial  life  of  the  country,  the  Soviet  regime 
finds  itself  in  a  tight  corner.  And  here,  too,  the  only 
way  out  of  the  immediate  difficulty  that  presents  itself 
to  the  leaders  of  the  Soviet  regime,  is  compulsion. 

7.   War  Against  the  Peasantry 

Of  course,  methods  of  compulsion  had  been  applied 
by  the  Soviet  regime  to  the  peasantry  all  through  the 
last  three  years.  But  they  were  all  concerned  with  the 
task  of  obtaining  grain.     No  systematic  or  organized 


280  ECONOMICS  OF  COMMUNISM 

attempt  was  made  to  apply  compulsion  to  agricultural 
production  itself.  On  the  contrary,  as  we  saw  above, 
Trotsky  even  solemnly  promised  the  middle  peasantry 
at  the  beginning  of  1919  that  the  Soviet  regime  would 
never  attempt  to  force  them  into  forms  of  work  which 
were  not  acceptable  to  them. 

However,  all  through  the  first  half  of  1920,  the 
Soviet  regime  was  testing  out  in  several  ways  the  pos- 
sibility of  applying  compulsion  to  the  field  of  agricul- 
tural production.  Some  of  the  problems  of  pressing 
importance  which  the  Soviet  regime  faces  in  this  field 
have  been  summarized  as  follows  by  a  Soviet  econo- 
mist :  * 

In  order  to  escape  requisitions,  the  middle  peasants  in 
many  localities  plant  grass  and  other  crops  unfit  for  human 
consumption,  instead  of  food  grains.  They  make  every  effort 
to  reduce  the  area  under  cultivation,  sowing  only  what  they 
require  for  themselves,  expecting,  in  case  of  need,  to  re- 
ceive supplementary  quantities  from  the  Government.  They 
sell  the  horses  they  have  in  the  autumn,  attempting,  in  that 
way,  to  evade  labor  duty,  and  then  dispose  of  whatevej*  fodder 
they  have  to  "speculators." 

The  most  important  element  in  the  situation,  of 
course,  is  the  contraction  of  the  sowing  area.  One  of 
the  factors  that  has  played  a  considerable  role  in  this 
has  been  the  peasant  practice  of  redividing  land  every 
once  in  a  while  by  communities.  In  1919  the  Soviet 
Government  attempted  to  regulate  this  by  issuing  a 
decree,  dated  June  28,  1919,  in  which  it  was  declared 
"undesirable   in   principle"    that   such   redistributions 

•  N.   Osslnsky,  loc.  cit. 


AGEICULTUEE  AND  THE  PEASANTRY    281 

should  be  made  at  frequent  intervals,  especially  in  those 
localities  where  a  division  had  taken  place  in  1918. 
This  decree  had  no  effect,  and  on  April  30,  1920,  the 
Soviet  Government  issued  another  decree,  in  a  tone  of 
much  greater  sternness,  this  time  forbidding  all  redis- 
tribution of  land,  except  by  permission  of  the  proper 
authorities.  This  last  decree  was  supplemented  by 
another  one,  issued  July  4,  1920,  which  forbade  the 
cutting  up  of  lands  with  intensive  or  well  organized 
cultivation,  even  when  the  peasants  using  that  land 
have  larger  per  capita  allowance  than  is  the  average 
for  the  given  territory,  provided,  however,  that  they 
have  enough  manpower  with  which  to  work  these  lands.* 
The  increasing  firmness  in  the  tone  of  the  succeeding 
decrees  dealing  with  this  question  indicates  the  manner 
in  which  the  Soviet  Government  has  been  trying  out 
its  ability  to  apply  compulsion  to  agricultural  produc- 
tion. 

In  the  spring  of  1920  attempts  were  made  locally  to 
forestall  the  tendency  on  the  part  of  the  peasantry  to 
keep  the  area  under  cultivation  as  small  as  possible. 
In  the  Government  of  Tula  practically  all  the  spring 
sowing  was  done  under  the  direct  supervision  of  the 
Soviet  authorities  and  the  results  of  this  are  consid- 
ered by  Soviet  experts  to  be  very  good.f 

On  the  basis  of  this  and  similar  experiments,  the 
Soviet  Government  decided  to  make  a  systematic  effort 
to  force  the  peasantry  to  enlarge  the  area  under  culti- 
vation during  the  winter  grain  season  of  1920.  A 
special    order    was   issued,    signed    by    Lenin    and    by 

•  Ekonomicheskaya   Zhisn,   July    2,    1920. 
t  N.  Ossinsky,  loc.  cit. 


282  ECONOMICS  OF  COMMUNISM 

Briukbanov,  the  Commissary  of  Food  Supply,  contain- 
ing specific  instructions  to  local  authorities  and  pro- 
visions for  drastic  measures  against  those  peasants  who 
refuse  obedience.* 

This  order  was  rendered  practically  necessary  by  the 
fact  that  almost  the  whole  territory  of  Soviet  Russia 
had  very  poor  summer  crops  on  account  of  practically 
universal  droughts.  The  situation  in  this  regard  had 
become  so  desperate  in  some  of  the  provinces  of  Central 
Russia  that  early  last  summer  an  epidemic  of  migration 
began.  Thousands  of  peasants  were  reported  as  leaving 
their  homes  and  moving  into  the  grain-producing  prov- 
inces, in  many  instances  in  wagons  or  even  on  foot.f 
The  Soviet  Government  took  strict  measures  to  prevent 
these  migrations,  and  followed  up  these  and  other 
measures  by  the  plan  of  compulsory  sowing  of  the  win- 
ter grains. 

Under  this  plan,  the  sowing  of  the  whole  area  suit- 
able for  winter  grains  was  proclaimed  to  be  a  measure 
of  military  necessary.  In  order  to  provide  enough  seed, 
"all  the  remaining  winter  grain,  still  kept  in  the 
hands  of  the  peasantry,  for  whatever  purpose,  should 
be  taken  over  for  seed,  .  .  .  and  not  one  poud  of  rye 
should  be  used  for  food,  until  the  seed  requirements  of 
each  family  are  satisfied."  Those  who  have  no  seed, 
should  receive  the  necessary  amounts  from  the  Govern- 
ment Seed  Fund,  to  be  returned  in  grain  with  a  twelve 
per  cent,  increment  during  the  following  year.  The 
whole  new  crop  of  winter  grain  must  be  used,  first  of 
all,  for  providing  the  necessary  seed  for  the  next  sow- 

•  Petrograd  Pravda,  August  7,  1920. 

t  Ekonomicheakaya  Zhisn,  June  15,   1920. 


AGRICULTUEE  AND  THE  PEASANTRY    283 

ing.  Only  the  amounts  remaining  can  be  turned  over 
into  food  stocks. 

Any  peasant  who,  for  any  reason  whatever,  fails  to 
sow  the  entire  area  in  his  possession  suitable  for  winter 
grains,  will  have  his  land  taken  away  from  him  and 
turned  over  to  the  community.  Any  person,  receiving 
grain  for  seed  and  using  it  for  any  other  purpose,  may 
be  punished  by  the  confiscation  of  his  property  and  by 
compulsory  labor. 

This  drastic  decree  is  the  beginning  of  a  new  policy 
on  the  part  of  the  Soviet  regime  with  regard  to  peas- 
antry and  the  agricultural  production  controlled  by  it. 
With  regard  to  the  first,  it  means  a  full-fledged  war 
against  them.  With  regard  to  the  second,  it  means,  in 
the  words  of  the  economist  whom  we  have  already 
quoted,*  "compulsory  interference  on  the  part  of  the 
Government  and  compulsory  mass  organization  of  pro- 
duction." 

The  Eighth  Congress  of  Soviets,  held  in  December, 
1920,  made  a  very  important  step  in  this  direction,  by 
approving  a  decree  for  the  state-wide  organization  of 
sowing  under  the  immediate  supervision  of  the  govern- 
mental agencies. 

The  Soviet  Government  now  sets  before  itself  the 
task  of  introducing  into  agricultural  production  the 
same  system  of  militarization  that  it  has  already  intro- 
duced in  industrial  production.  It  is  even  expected 
that  a  system  of  premiums  for  larger  productivity  will 
be  introduced  in  agricultural  production,  as  it  is  being 
used  in  the  industries.     A  peasant  would  become  sub- 

•  N.  Osslnaky,  loc.  cit. 


384  ECONOMICS  OF  COMMUNISM 

ject  to  universal  labor  service  and  to  conscription  and 
mobilization  at  the  will  of  the  state  in  the  same  manner 
as  an  industrial  workman.  Forms  will  no  longer  count, 
for  the  whole  country  would  become  a  unified  "agricul- 
tural factory." 


CONCLUSION 

SUMMARY   OF   THE  SITUATION    BY   THE   END  OF    1920 

Now  that  we  have  examined  the  salient  features  of  the 
situation  in  Eussia  resulting  from  her  three  yeai's' 
experiment  in  the  economics  of  Communism,  we  can 
retrace  our  steps  and  reconstruct  in  general  outlines  the 
process  through  which  all  this  has  come  about. 

It  is  generally  admitted  and  it  is,  no  doubt,  true  that 
Bolshevism  in  Russia,  which  has  taken  the  shape  of  her 
experiment  in  Communism,  is  the  direct  outcome  of  the 
world  war.  The  years  of  tbe  war  have  produced  wide- 
spread and  deep-rooted  effects  upon  the  life  of  the  world. 
Particularly  telling  have  these  effects  been  in  the 
domain  of  man's  economic  life.  The  manifestations  of 
these  effects  are  universal  and  familiar  enough:  labor 
unrest,  contraction  of  production,  rise  in  prices,  profi- 
teering, etc. ;  in  short,  an  economic  crisis  of  unusual 
extent  and  intensity.  Described  in  terms  of  a  thinker 
who  would  be  classified  to-day  as  a  conservative,  this 
crisis  means,  essentially,  the  reaction  to  the  demoraliza- 
tion produced  by  the  war.  Described  in  terms  of  a 
Socialistic  thinker,  the  crisis  is  the  expression  of  a  pre- 
ponderance of  consumption  social  psychology  over  pro- 
duction social  psychology,  instead  of  vice  versa  as  in 
normal  times.     Finally,  described  in  terms  of  a  Com- 

285 


286  ECONOMICS  OF  COMMUNISM 

munist  thinker,  the  crisis  is,  fundamentally,  tlie  break- 
ing down  of  the  economic  relationships  of  social  life. 
These  three  definitions  mean  practically  the  sa,me 
thing,  although  the  last  one  is,  probably,  the  most 
precise. 

However  it  is  defined,  the  important  thing  about  the 
economic  crisis  produced  by  the  war  is  that  it  unmis- 
takably exists.  The  problem  before  mankind  is  how 
to  overcome  it.  It  is  in  the  approach  to  this  problem 
that  really  lies  the  key  to  the  whole  economic  situa- 
tion of  the  world  as  it  was  left  by  the  war  and  has  been 
affected  by  the  post-war  period.  Each  of  the  active 
social  groups  in  various  countries  has  its  own  point  of 
view  and  its  own  approach. 

Among  the  non-Socialist  groups,  the  reactionary  wing 
approaches  the  problem  of  reconstruction  trying  to 
forget  that  there  ever  was  such  a  thing  as  the  world 
war.  All  that  this  group  desires  is  to  return  things  to 
where  they  were  before  1914.  The  liberal  wing  realizes 
that  it  is  impossible  to  strike  the  war  out  of  human 
experience  any  more  than  it  is  possible  to  strike  it  out 
of  history.  Hence  the  effects  of  the  war  must  be  taken 
into  account  as  factors,  determining  to  a  certain  degree 
the  principles  and  the  work  of  economic  reconstruction. 
New  forms  and  new  ways  are  necessary;  many  of  the 
old  methods  will  no  longer  work.  The  moderate  labor 
and  Socialist  groups  also  believe  that  reconstruction  is 
possible  if  certain  correctives  are  introduced  into  the 
situation  in  order  to  compensate  for  those  factors  which 
must  be  given  up.  The  more  radical  among  them  press 
a  rather  large  program  of  change,  both  along  economic 
and    political    lines.     All    the    countries    of    Western 


SUMMARY  OF  THE  SITUATION  287 

Europe  present,  iu  one  form  or  another,  in  higher  or 
lower  degree,  an  attempt  to  put  through  as  large  as 
possible  a  program  of  social  reconstruction,  while 
repairing  the  economic  damage  done  by  the  war. 

All  these  groups  differ,  sometimes  very  radically  and 
very  belligerently,  in  the  methods  to  be  applied  and, 
particularly,  in  the  scale  with  which  they  measure  what 
each  of  them  regards  as  the  irreducible  minimum  of 
change.  In  these  differences  lie  the  most  fundamental 
causes  of  the  slowness  with  which  the  process  of  recon- 
struction is  proceeding  in  war-torn  Europe.  But  in  one 
thing  all  these  groups  agree :  the  economic  relationships, 
shattered  or  impaired  by  the  war,  must  be  restored  and 
reestablished.  Until  the  war  brought  on  the  economic 
crisis  through  which  the  world  is  now  passing,  the  life 
of  the  world  was  organized  in  such  a  way  that  its  pro- 
ductive activities  were  approximately  in  correspondence 
with  its  consumption  requirements,  based  on  the  main- 
tenance of  a  certain  standard  of  life,  and  the  connection 
between  the  two  basic  processes  was  furnished  by  a 
system  of  distribution,  adequately  organized  for  the 
maintenance  of  that  standard.  This  organization  was 
based  on  a  definite  system  of  economic  relationships  in 
each  of  its  domains.  It  was  not  perfect  or  even  the  best 
that  was  possible  under  the  circumstances.  It  was, 
undoubtedly,  wasteful  in  many  of  its  processes,  unjust 
in  many  of  its  relationships.  But  such  as  it  was,  it 
was  the  product  of  centuries  of  human  endeavor  and 
progress,  and  the  basis  for  further  endeavor  and  future 
progress. 

The  war,  by  putting  an  unprecedented  strain  upon 
this  economic  organization  of  human  society,  impaired 


288  ECONOMICS  OF  COMMUNISM 

the  balance  that  existed  before  it  broke  out.  It 
increased  disproportionately  the  number  of  individuals 
who  were  solely  consumers,  both  as  soldiers  and  as  pro- 
ducers of  goods  designed  for  destruction.  It  correspond- 
ingly diminished  the  number  of  producers  of  goods 
designed  for  consumption.  What  was  most  important 
of  all,  perhaps,  it  introduced  a  false  financial  standard 
through  the  process  of  inflation,  creating  many  eco- 
nomically unreal  values  in  the  form  of  rapidly  increas- 
ing wages  and  prices.  In  short,  it  produced  a  psy- 
chology based  on  standards  of  consumption,  which  were 
out  of  correspondence  with  the  actual  extent  of  produc- 
tion. This,  in  turn,  resulted  inevitably  in  the  impair- 
ment of  important  economic  relationships. 

All  the  groups  that  we  have  enumerated,  in  their 
approach  to  the  problem  of  reconstruction,  lay  particu- 
lar emphasis  on  the  possibility  and  the  necessity  of 
restoring  these  impaired  or  shattered  relationships, 
since  the  alternative  is  a  lowering  of  pre-war  standards 
and  the  consequent  regress  of  society.  They  believe  that 
every  effort  should  be  made  to  stop  a  further  disinte- 
gration of  these  relationships,  even  if  they  differ  in  the 
methods  by  which  this  can  be  effected. 

The  Communists  in  their  approach  to  the  problem 
take  a  position  which  is  diametrically  opposed  to  that 
which  we  have  just  stated.  To  them  the  war  and  the 
crisis  which  it  had  brought  in  its  wake  are  not  merely  a 
misfortune  that  had  befallen  mankind,  but  an  oppor- 
tunity. They  do  not  wish  to  see  the  old  economic  rela- 
tionships ''patched  up."  On  the  contrary,  they  want 
the  disintegration  to  go  on,  until  the  whole  economic 
structure  of  society  would  crash  to  the  ground.     Into 


SUMMAEY  OF  THE  SITUATION  289 

the  psychology  of  labor  produced  by  the  reaction  of  the 
war,  the  Communists  introduce  the  active  agent  of  their 
propaganda.  Without  it,  sheer  force  of  inertia  may 
carry  the  working  masses  through  the  crisis  produced 
by  the  war  and  gradually  lead  to  the  restoration  of  the 
economic  relationships  for  which  all  the  non-Commu- 
nist groups  are  working,  energetically,  even  if  not  in 
unison.  With  the  active  agent  of  Communism  injected 
into  the  situation,  the  crisis  should  extend  into  a  col- 
lapse, and  then  the  field  would  be  open  for  that  experi- 
ment in  new  forms,  which  the  Communists  so  ardently 
desire  and  for  which  they  work  so  fanatically. 

So  much  we  know  from  the  general  theory  of  Com- 
munism, as  its  law  is  being  laid  down  by  its  leaders. 
But  we  have  before  us  also  the  results  of  their  experi- 
ment in  Russia,  which  is,  no  doubt,  a  test  or,  at  least, 
a  valuable  demonstration  of  what  happens  when  the 
disintegration  of  the  economic  relationships  of  human 
society  is  actively  stimulated. 

The  war  and  the  revolution  produced  in  Russia  a 
double  process  of  disintegration  in  social  relationships. 
In  the  first  place,  the  economic  relationships  were 
impaired  by  the  war  and  shattered  still  further  by  the 
revolution ;  and  in  the  second  place,  the  political  rela- 
tionships of  the  first  period  of  the  war  were  shattered 
altogether  by  the  revolution  and  new  relationships 
substituted  for  them  in  the  form  of  the  Provisional 
Government  and  the  system  it  represented.  The  task 
which  the  elements  behind  the  Provisional  Government 
set  before  themselves  was  two-fold :  the  strengthening  of 
the  new  political  relationships  brought  about  by  the 
revolution,   and  the  restoration  of  the  economic  rela- 


290  ECONOMICS  OF  COMMUNISM 

tionships  impaired  by  both  the  war  and  the  revolution. 
The  Communists  or  Bolsheviki,  in  opposition  to  these 
elements,  were  working  actively  for  the  introduction 
into  the  condition  of  the  economic  relationships  of  simi- 
lar revolutionary  methods  as  those  that  were  applied  by 
the  March  revolution  in  the  case  of  the  political  rela- 
tionships, i.  e.,  an  active  and  energetic  stimulation  ot 
their  disintegration.  Through  the  weakness  of  their 
opponents,  rather  than  through  their  own  strength,  they 
succeeded  in  this,  and  the  field  was  open  for  their 
experiment. 

The  plan  of  campaign  which  they  followed,  uncon- 
sciously, perhaps,  for  it  was  not  until  much  later  on  that 
the  leaders  of  Communism  actually  described  it,  was 
to  concentrate  all  their  efforts  on  industrial  production, 
leaving  agricultural  production  undisturbed  as  far  as 
possible.  The  former  was,  thus,  in  the  subsequent 
formulation  of  the  leaders  of  Communism,  to  be  the 
battle-front  of  the  social  revolution,  while  the  latter 
was  to  be  the  supply  base.  Victory  for  Communism 
was  to  be  won  in  industrial  production  through  the 
substitution  of  new  economic  relationships  for  the  old. 
The  nationalization  of  industry  and  the  centralization 
of  control  over  it  in  the  hands  of  the  Government,  would 
transform  the  whole  industrial  life  of  the  country  into 
one  hage  factory,  in  which  every  person  at  work,  from 
top  to  bottom,  would  be  an  employee  of  the  state.  Thus, 
private  ownership  of  the  means  of  production  and  the 
system  of  profits  would  be  eliminated  in  industrial  pro- 
duction, each  employee  of  the  state  being,  according  to 
original  theory,  paid  alike,  and  mechanical  equality 
being  thus  introduced. 


SUMMARY  OF  THE  SITUATION  291 

In  agriculture  a  different  procedure  was  considered 
necessary.  There,  neither  ownership  of  the  means  of 
production,  nor  the  system  of  profits  were  to  be  elimi- 
nated. Only  the  land  should  be  taken  out  of  private 
hands  as  property,  and  alotted  among  those  who  work 
on  it.  The  technical  equipment  was  to  be  left  in  the 
hands  of  individuals,  and  the  product  could  be,  theo- 
retically, sold  by  the  individual  as  his. 

Thus,  the  forms  of  productive  activities  were  not 
considered  essential  or  vital  to  the  success  of  the  Com- 
munist experiment  at  its  first  stages.  The  real  power 
of  the  group  conducting  the  experiment  and  conse- 
quently controlling  the  situation  was  to  be  in  its  con- 
trol over  the  instrument  of  distribution.  If  things 
worked  smoothly,  if  all  the  employees  of  the  national- 
ized industry  performed  their  duties  at  least  with  the 
same  degree  of  willingness  and  productivity  as  they  had 
done  before,  if  the  peasants  were  willing  to  place  the 
product  of  agricultural  production  in  the  hands  of  the 
Government  as  the  sole  distributing  agency  in  return 
for  the  manufactured  goods,  for  which  the  Government 
would  also  have  been  the  sole  distributing  agency,  then, 
obviously,  conditions  would  have  been  ideal  for  the 
success  of  the  experiment.  But  things  did  not  work  out 
that  way. 

In  the  first  place,  industrial  production  broke  down. 
That  was  expected  on  the  basis  of  the  theory,  though, 
undoubtedly,  not  to  the  extent  to  which  it  actually 
occurred.  Actively  stimulated  towards  a  disintegra- 
tion, the  elements  which  constituted  the  economic  rela- 
tionships that  were  being  destroyed  and  which  had  to 
serve  again  as  elements  of  the  economic  relationships 


292  ECONOMICS  OF  COMMUNISM 

that  were  being  created  by  Communism,  continued  to 
tend  to  a  negative,  rather  than  a  positive  attitude 
toward  production,  after  the  disintegration  was  actually 
consummated.  The  most  powerful  means  of  coercion 
over  them  that  the  Government  had  was  the  control  of 
their  supply  of  food  and  of  other  essentials  of  life. 
But  that  meant  a  favorable  attitude  on  the  part  of  the 
peasantry. 

As  we  saw  from  the  data  of  the  food  crisis,  the  atti- 
tude of  the  peasantry  was  anything  but  favorable:  the 
chief  reason  for  this  was  the  maintenance  of  the  govern- 
ment grain  monopoly.  The  price  of  grain  set  by  the 
Government  was,  undoubtedly,  too  low  at  the  very 
beginning  to  be  acceptable  to  the  peasantry.  At  that 
time,  the  Soviet  Government  was  not,  as  yet,  as  lavish 
with  its  interminable  supply  of  paper  money  as  it 
became  later  on.  Instead  of  increasing  the  "fixed" 
price  of  grain,  it  attempted  to  force  the  peasantry  to 
give  up  its  grain  at  the  low  price.  The  result  of  that 
was,  on  the  one  hand,  a  constantly  growing  resentment 
on  the  part  of  the  peasantry,  and  on  the  other  hand, 
the  glaring  failure  on  the  part  of  the  Government  to 
control  the  actual  distribution  of  the  food  supply  of 
the  country. 

With  control  over  the  distribution  of  food  actually 
taken  out  of  its  hands  and  consequently  inaccessible  to 
it  as  a  means  of  coercion  in  industrial  production,  the 
Soviet  Government  at  first  resorted  to  paper-money 
generosity.  First,  it  increased  the  salaries  paid  to 
specialists,  managers,  etc.,  giving  up  definitely  the  ideas 
of  mechanical  equality.  Then  it  divided  the  population 
of  the  cities  and  industrial  centers  into  groups  accord- 


SUMMARY  OF  THE  SITUATION  293 

ing  to  certain  privileges,  particularly  the  amount  of 
food  received.  Then  it  singled  out  the  army  and  the 
personnel  of  the  Government  and  placed  them  into  con- 
ditions of  higher  privilege  than  any  other  group  of  the 
population.  In  this  manner,  it  succeeded  in  terrorizing 
the  masses  of  the  city  population  and  creating  out  of 
the  army  and  the  government  officialdom  groups  whose 
"well-being  and  privileged  condition  depended  upon  the 
preservation  of  the  existing  regime  and  which  would, 
through  personal  interest,  be  loyal  to  the  regime.  In 
this  manner,  for  one  thing,  it  was  possible  for  the  Soviet 
Government  to  apply  methods  of  mass  terror  for  crush- 
ing all  opposition :  it  had  a  privileged  force,  bribed  by 
its  privilege  to  remain  loyal  and  obedient. 

Moreover,  without  recognizing  or  officially  even 
taking  notice  of  that  illegal  "free"  trade  which  took 
the  form  of  "spekulyatsia,"  the  Soviet  Government  was, 
nevertheless,  forced  to  take  it  into  account  as  the  most 
important  factor  in  the  determination  of  the  paper- 
money  wages  which  were  to  be  paid  to  labor.  There 
is  no  doubt  that  the  institution  of  "spekulyatsia"  is  the 
most  glaring  of  all  contradictions  of  the  Soviet  regime. 

But  in  spite  of  all  this,  the  economic  relationships 
which  were  essential  to  production  obstinately  refused 
to  form  themselves  into  the  configurations  prescribed 
by  the  Communist  theory  as  the  bases  of  production 
in  the  domain  of  both  industry  and  agriculture.  As 
we  have  seen,  all  the  manifestations  of  the  economic 
crisis  that  have  become  familiar  to  the  other  countries 
of  the  world  exist  in  Soviet  Russia,  only  magnified 
many-fold.  And  in  the  final  analysis,  the  reason  for 
that  lies  not  so  much  with  the  process  of  production,  as 


294  ECONOMICS  OF  COMMUNISM 

witJi  the  process  of  distribution.  Take  for  example 
such  a  vital  industry  as  transportation.  It  is  admittedly 
disorganized.  The  rehabilitation  of  its  rolling  stock, 
which,  alone,  can  lessen  the  disorganization,  is  a  prob- 
lem in  industrial  production.  But  industrial  produc- 
tion is  impaired  by  the  low  productivity  of  labor,  due  to 
labor  shortage,  laxity  in  labor  discipline,  etc.  These 
conditions  can  be  alleviated  somewhat  only  if  the  Soviet 
Government  should  regain  possession  of  the  instrument 
of  coercion,  represented  by  control  of  the  food  supply. 
But  this  requires  a  change  of  attitude  on  the  part  of 
the  peasantry,  which  is  impossible  unless  the  Soviet 
Government  should  give  up  the  system  of  ^'fixed"  prices 
and  the  government  grain  monopoly.  And  this  the 
Soviet  Government  determinedly  refuses  to  do. 

Thus,  here  we  have  the  crucial  point  in  the  whole 
situation.  Why  does  the  Soviet  Government  refuse  to 
allow  freedom  of  trade?  Because  its  formal  control 
over  the  apparatus  of  distribution  constitutes  to-day  the 
only  thing  that  really  remains  of  the  whole  stock  of 
Communistic  principles  and  methods  used  in  the  Rus- 
sian experiment.  To  give  this  up  means  to  acknowledge 
the  final  fiasco  of  the  whole  experiment.  It  means  a 
complete  return  to  capitalistic  methods,  only  in  con- 
ditions infinitely  inferior  than  before  the  experiment, 
because  of  the  destruction  and  impairment  of  productive 
forces,  material  and  human. 

Wlien  they  began  their  career,  the  Communist  lead- 
ers were  ambitious  enough  to  believe,  or,  at  least,  bold 
enough  to  state,  that  they  spurned  both  the  forms  and 
the  methods  of  the  capitalistic  system  of  production. 
As  a  matter  of  fact,  they  spumed  neither.     It  is  true, 


SUMMARY  OF  THE  SITUATIOK  295 

that  they  nationalized  most  of  the  larger  industrial 
enterprises.  But  that  is  merely  the  extension  of  the 
system  of  state  Socialism  that  has  long  been  familiar 
in  the  form  of  state  railways,  state  telegraph  and  teler 
phone  system,  etc. ;  such  state  monopolies  existed  in 
Russia  herself  under  the  Imperial  regime.  Privately 
owned,  non-nationalized  enterprises  are  not  forbidden; 
they  continue  to  exist  and,  if  we  take  into  account  the 
cooperative  production  units  which  have  not  been 
broken  up,  we  find  that  non-nationalized  production 
continues  to  play  a  most  important  part  in  the  whole 
process  of  the  country's  industrial  production. 

As  for  methods,  the  Communist  leaders  began  their 
improvement  upon  the  methods  of  the  capitalist  system 
by  introducing  equal  compensation  for  all ;  only  to  give 
this  up  in  favor  of  an  extremely  complicated  differentia- 
tion of  reward  for  labor.  They  have  introduced  piece 
work,  premiums,  and  penalties.  They  began  by  placing 
management  on  the  basis  of  committee  work;  only  to 
give  it  up  again  in  favor  of  single-man  management. 

In  agricultural  production,  they  introduced  osten- 
sibly the  system  of  the  socialization  of  land,  leaving  the 
methods  of  production  as  they  had  been  under  capital- 
ism. Later  on,  as  means  to  larger  production,  they 
made  attempts  to  introduce  new  agrarian  forms,  but 
did  not  expect  to  get  any  gi^eat  success  out  of  them  and 
did  not  achieve  any  success.  The  system  of  socializa- 
tion, in  actual  practice,  simply  became  a  system  of  fixed 
maxima  of  land  holding. 

The  distinguishing  feature  of  the  Communist  eco- 
nomic system  is  in  the  process  of  distribution ;  not  from 
the  point  of  view  of  form,  but  from  that  of  principle. 


296  ECONOMICS  OF  COMMUNISM 

State  monopolies  in  different  phases  of  distribution  are 
also  no  novelty.  But  those  monopolies  usually  had 
merely  fiscal  importance.  In  the  Russian  Communist 
experiment,  trade  monopoly  or  the  centralization  of  all 
functions  of  distribution  in  the  hands  of  the  Govern- 
ment, differs  not  only  in  its  much  greater  extent  and 
all-embracing  nature,  but  also,  and  more  particularly, 
in  the  purpose  to  which  it  is  put.  Its  importance  is 
no  longer  fiscal,  but  administrative  in  the  broadest  sense 
of  that  word.  It  is  the  most  effective  potential  instru- 
ment of  coercion  in  the  hands  of  the  Soviet  Government 
for  the  purpose  of  controlling  the  various  groups  of 
population  in  the  different  phases  of  production. 

Theoretically,  too,  the  process  of  distribution  has 
a  paramount  importance  and  significance.  Socialism, 
taken  in  the  broad  implications  of  its  theory,  is,  essen- 
tially, a  movement  for  the  perfection  of  economic  dis- 
tribution, from  the  point  of  view  of  both  form  and  prin- 
ciple. The  Marxian  theory  insists  on  the  necessity  of 
taking  over  the  technical  productive  equipment  of  capi- 
talism and  perfecting  it  by  means  of  a  new  system  of 
distribution,  that  would  be  on  a  higher  plane  both  eco- 
nomically and  ethically.  The  Marxian  Socialists  who 
are  opposed  to  the  Communists  criticize  them  on  the 
point  of  their  interpretation  of  the  Marxian  theory  with 
regard  to  the  time  of  the  introduction  of  Socialism. 
The  original  theoreticians  of  Socialism  do  not  say 
whether  it  is  necessary  to  destroy  the  technical  appara- 
tus of  the  capitalistic  system  before  taking  it  over,  or 
not.  The  opponents  of  the  Communists  believe  that 
the  implication  of  the  original  theory  is  clear,  viz.,  that 
if  the  technical  apparatus  of  capitalism  cannot  be  taken 


SUMMARY  OF  THE  SITUATION  297 

over  in  functioning  condition,  that  simply  means  that 
it  is  too  early  for  an  attempt  to  introduce  Socialism. 
They  consider  that  if  this  apparatus  of  production  has 
to  be  destroyed  or  at  least  seriously  impaired  before  it 
can  be  taken  over  and  fitted  for  Socialistic  production, 
then  obviously,  when  taken  over,  its  total  productive 
output  will  be  smaller  than  under  capitalism.  In  such 
conditions  the  higher  system  of  distribution,  upon  which . 
rests  the  principal  claim  of  Socialism,  will  be  rendered 
physically  impossible.  The  Communists,  determined 
to  put  into  operation  their  own  interpretation  of  the 
original  theory  concerning  the  method  in  which  the 
productive  apparatus  of  capitalism  can  be  taken  over 
for  Socialism,  attempt  to  carry  out  the  implications  of 
the  theory  concerned  with  distribution  by  means  of 
mechanical  regulation  from  above. 

What  was  bound  to  happen  under  the  circumstances 
really  did  happen  in  Russia.  The  contraction  of  pro- 
duction in  industry  was  actively  stimulated  by  the 
Communists  as  a  tactical  step.  The  general  disorgan- 
ization in  the  country  already  produced  a  food  crisis 
of  considerable  acuteness,  the  manifestations  of  which 
were  the  scarcity  of  food  supply  and  the  growth  of  prices 
for  articles  of  consumption.  Again  for  tactical  pur- 
poses, the  peasantry  was  let  alone  at  the  beginning  of 
the  regime  as  far  as  agricultural  production  was  con- 
cerned. If  left  to  itself,  the  situation  was  bound  to 
resolve  itself  into  a  rapid  contraction  of  agricultural 
production,  resulting  from  a  decreased  output  of  those 
products  of  industry  which  could  be  exchanged  for  food 
and  from  the  Government's  policy  of  low  ''fixed"  prices 
for  food  products.     This  was  a  new  crisis,  superinduced 


298  ECOISrOMICS  OF  COMMUNISM 

upon  tJie  economic  crisis  already  produced  hj  the  war 
and  the  revolution,  and  brought  about  directly  by  the 
Communist  activities. 

The  Communist  leaders  had  the  wisdom  to  see  that 
the  point  of  approach  in  dealing  with  the  situation  was 
in  the  process  of  distribution;  but  they  were  scarcely 
wise,  until  it  was  too  late  to  change,  in  the  choice  of  the 
methods  which  they  used  for  dealing  with  the  situa- 
tion. They  relied  entirely  upon  the  expediency  of 
the  monopoly  of  distribution,  and  in  the  practical  work- 
ing out  of  its  forms,  they  refused  to  take  into  account 
the  fact  that  the  psychology  of  the  principal  seller,  the 
peasant,  is  still  instinct  with  the  effects  of  the  law 
of  supply  and  demand.  It  is  a  question  of  theory 
whether  that  law  is  really  a  law  or  only  a  postulate 
that  can  easily  be  overthrown.  The  Communist  lead- 
ers acted  on  the  assumption  that  the  law  is  not  neces- 
sarily universally  operative;  they  attempted  to  intro- 
duce mechanical  compulsion  in  its  stead,  and  stubbed 
their  toes  very  painfully. 

It  was  probably  their  supreme  confidence  in  the  ap- 
plicability of  the  tactical  part  of  their  theory  that  made 
the  Communist  leaders  so  stubbornly  determined  in 
controlling  the  distribution  of  foodstuffs  by  means 
of  "fixed"  prices,  which  appeared  to  the  peasants  dis- 
proportionately low.  But  there  was,  undoubtedly,  an- 
other reason.  Ever  since  the  time  when  the  opponents 
of  Bolshevism  began  to  criticize  the  methods  of  the 
Soviet  regime,  rather  than  its  theory,  they  have  all 
pointed  out  that  the  crucial  point  about  the  whole  ex- 
periment of  Communism  was  the  obvious  emptiness  of 
its  boast  that  it  controlled  distribution.     To  give  up  the 


SUMMARY  OF  THE  SITUATION  299 

control  over  distribution,  to  reestablish  at  least  to  some 
extent  the  free  trade  that  was  demanded  of  them  by 
their  critics  and  opponents,  would,  irrespective  of  the 
wisdom  of  such  a  step,  signify  capitulation,  an  ac- 
knowledgment of  mistakes  that  were  really  funda- 
mental. The  Communist  leaders  have  been,  through 
the  past  three  years  and  are  still  to-day,  too  much  of 
propagandists  and  too  little  of  statesmen  to  make  a 
step  like  this. 

But  economic  processes  have  done  their  work,  irre- 
spective of  the  forms  decreed  by  the  Soviet  regime. 
The  shell  of  nationalized  production  and  monopolized 
distribution  now  really  covers  the  exercise  of  private 
initiative,  unregulated  by  normal  economic  factors,  and 
consequently  inestimably  wasteful  and  harmful,  Rus- 
sia was  promised  by  the  leaders  of  Communism  the 
establishment  of  Socialism;  instead  of  that,  she  has 
been  dragged  by  her  experiment  in  the  economics  of 
Communism  to  a  much  more  primitive  stage  of  economic 
development  than  even  that  low  stage  of  capitalism 
on  which  she  was  before  the  revolution.  Growing  up 
spontaneously  in  the  peculiar  conditions  presented  by 
the  system  of  "spekulyatsia,"  the  exercise  of  private 
initiative  in  Russia  has  taken  the  form  of  utterly  un- 
enlightened and  rapacious  economic  activity,  so  char- 
acteristic of  the  lowest  stages  of  capitalistic  produc- 
tion in  an  economically  backward  country.  In  the 
words  of  the  writer  on  the  causes  of  "spekulyatsia," 
whose  article  we  quoted  before,*  there  is  being  created 
in  Russia  "a  new  bourgeois  class,  a  new  profiteering 

*  B.  Frumkin,  Moscow  Pravda,  February  4,  1921. 


300  ECONOMICS  OF  COMMUNISM 

bourgeoisie,  which  acquires  greater  and  greater  wealth 
and  lives  in  luxury,  while  the  laboring  masses  are 
starving." 

Numerous  attempts  have  been  made  to  exonerate  the 
Soviet  regime  from  all  blame  for  Russia's  economic  dis- 
aster and  to  saddle  this  blame  on  the  blockade  and  the 
consequent  interruption  of  foreign  trade.  In  the  light 
of  what  has  already  been  said  in  this  summary,  let  us 
see  what  would  have  been  likely  to  happen  if  there 
had  not  been  any  blockade.  Foodstuffs  could  not  be 
brought  into  Russia  in  anything  like  the  quantities  that 
were  needed.  The  food  crisis  of  greater  or  lesser  de- 
gree of  acuteness  existing  in  practically  all  the  countries 
of  Western  Europe  is  the  best  proof  of  that.  Possibly 
in  some  of  the  larger  cities  the  situation  might  have  been 
temporarily  improved.  Nor  could  manufactured  goods 
be  brought  in  in  any  great  quantities :  the  anti-Bolshevist 
territories  had  not  been  blockaded,  yet  the  shortage  in 
manufactured  articles  there,  both  in  Siberia  and  in 
South  Russia  had  been  chronically  almost  as  acute  as 
in  Soviet  Russia.  But  let  us  imagine,  for  the  sake  of 
argument,  that  certain  amounts  of  manufactured  goods 
could  have  been  brought  in.  What  would  have  hap- 
pened to  them  ? 

These  goods  would  have  been  stored  in  the  Soviet 
warehouses,  pending  their  distribution.  Is  there  any 
reason  to  believe  that  the  administration  of  these  ware- 
houses would  have  been  any  better  than  it  actually  has 
been  under  the  Soviet  regime,  as  we  have  described  it 
to  be  in  the  chapter  on  Management?  What  would 
there  have  been  to  make  warehouses  containing  foreign 
goods  more  secure  from  looting  for  purposes  of  "speku- 


SUMMAEY  OF  THE  SITUATION  301 

lyatsia"  than  warehouses  containing  home-made  goods? 
That  part  of  the  manufactured  goods,  imported  from 
abroad,  which  would  not  have  been  stolen,  would  be 
offered  to  the  peasants  in  exchange  for  their  food  prod- 
ucts. But  since  grain  monopoly  with  its  low  prices 
offered  to  peasants  is  a  matter  of  Communistic  honor 
and  personal  ambition  for  the  leaders  of  Communism, 
rather  than  of  policy  and  wisdom,  where  is  the  assur- 
ance that  the  peasants  would  be  offered  more  for  their 
grain  than  othei-wise?  And  certainly  the  peasant 
would  be  just  as  loath  to  accept  five  roubles'  worth  of 
foreign  goods  as  he  has  been  to  accept  five  roubles' 
worth  of  home-made  goods,  for  a  poud  of  rye,  if  he 
thinks  he  is  entitled  to  twenty-five  roubles'  worth  of 
goods  for  it. 

From  our  analysis  of  the  raw  materials  and  the  food 
supply  situation  it  is  clear  that  even  if  there  had  been 
no  blockade,  Soviet  Russia  would  still  not  have  been 
able  to  export  anything  and  would,  therefore,  have  noth- 
ing with  which  to  pay  for  her  imports.  A  concrete 
proof  of  the  correctness  of  this  may  be  found  in  the 
following  data  concerning  Soviet  Russia's  actual  for- 
eign trade  during  the  months  of  April,  May,  and  June, 
1920,  when  she  began  to  trade  freely  with  Esthonia 
and  when,  consequently,  the  blockade  was  actually  non- 
existent: during  that  period,  according  to  the  Ehono- 
micheskaya  Zhisn  of  July  17,  1920,  Soviet  Russia  im- 
ported through  Esthonia  1,434  carloads  of  manufactured 
articles  and  supplies,  while  her  only  exports  were  141 
carloads  of  flax.  Transportation  obviously  had  nothing 
to  do  with  this  phase  of  the  situation :  the  same  cars  that 
carried  goods  from  Reval  could  have  carried  goods  to 


302  ECONOMICS  OF  COMMUNISM 

Reval.  But  there  was  nothing  to  carry.  During  the 
time  that  Russia  did  not  trade  with  the  outside  world, 
she  also  did  not  produce. 

The  civil  war  and  the  blockade  which  was  the  result 
of  it  may  account  for  some  of  Russia's  hardships.  But 
certainly,  no  blockade  can  account  for  the  hostility  to- 
wards the  Soviet  regime  on  the  part  of  the  peasantry, 
or  for  the  dishonesty  and  the  deliberate  inefficiency  of 
the  managing  personnel  in  industry,  as  well  as  the  re- 
fusal on  the  part  of  the  workmen  to  maintain  at  least 
the  minimum  standards  of  production.  Yet  it  is  these 
conditions  that  have  brought  the  Soviet  regime  to  the 
blind  wall  of  constantly  decreasing  production  in  both 
industry  and  agriculture.  And  the  only  way  out  of 
this  situation  that  the  leaders  of  Russian  Communism 
can  devise  is  the  application  of  force. 

The  whole  economic  situation  in  Russia  may  be  rep- 
resented in  the  following  manner:  all  branches  of  pro- 
duction feed  the  stream  of  distribution,  but  in  ever  in- 
creasing quantities  of  water.  Normally  this  stream  is 
regulated  by  means  of  levees  along  its  banks.  The 
Soviet  Government  has  introduced  a  new  factor  of  reg- 
ulation, in  the  form  of  a  dam  thrown  across  the  stream. 
But  it  has  proven  to  be  a  poor  engineer,  for  most  of 
the  dam  is  higher  than  the  banking  levees.  So  only 
a  small  part  of  the  water  in  the  stream  flows  over  the 
dam,  while  most  of  it  overfloods  the  banks  and  seeks 
its  own  channels  in  an  unregulated  and  undirected  man- 
ner. Yet  the  engineer  stands  there,  admiring  his  work, 
assuring  himself  that  somehow  or  other  things  would 
turn  out  for  the  best,  and  refusing  with  all  the  deter- 
mination of  fanaticism  to  change  his  work. 


SUMMARY  OF  THE  SITUATION  303 

Whatever  the  Soviet  regime  was  at  the  beginning 
politically,  it  is  now  openly  and  avowedly  a  dictatorship 
of  the  Communist  Party,  i.  e.,  of  what  is  defined  by  the 
doctrine  of  Communism,  as  the  active  and  determined 
minority  of  the  proletariat.  Whatever  it  hoped  to  be 
economically,  it  is  anything  but  the  "workman-peasant" 
authority,  as  it  still  styles  itself  with  pride.  It  has 
alienated  itself  from  both  workmen  and  peasants.  It 
has  to  apply  to  both  a  constantly  increasing  pressure 
of  sheer  force.  It  has  created  for  itself  a  support  con- 
sisting of  two  privileged  classes,  the  officialdom  and  the 
army,  the  privileged  condition  of  which  is  bound  up 
with  the  continued  existence  of  the  regime  itself.  What- 
ever it  calls  itself  and  whatever  it  pretends  to  be  in 
theory,  it  is  precisely  what  the  Marxian  theory  calls 
a  force,  placed  above  society,  and  striving  constantly 
"to  alienate  itself  from  society  as  a  whole."  As  far 
as  this  is  concerned,  the  Soviet  regime  has  merely  be- 
come transformed  into  that  feature  of  the  capitalistic 
society,  against  which  the  principal  invective  of  the 
Marxian  criticism  is  directed  most  strongly. 

But  it  has  been  the  regime  in  Russia,  politically  and 
economically,  for  over  three  years,  and  though  its  end 
may  come  any  day,  it  is  still  in  power.  During  the 
period  of  its  existence,  the  Soviet  regime  has  destroyed 
much  and  built  very  little.  That  so  much  has  been 
torn  down  and  so  little  built  up  at  so  critical  a  period, 
is  a  great  misfortune  for  Russia ;  yet  there  is  consolation 
in  the  fact  that,  despite  the  appearance  of  utter  ruin 
which  has  attended  the  Soviet  regime,  the  destruction 
has  not  been  as  great,  fundamentally,  as  might  be  sup- 
posed.    This  is  a  very  important  fact  in  connection 


304  ECONOMICS  OF  COMMUNISM 

with  the  possibilities  of  Russia's  economic  recon- 
struction. 

In  industrial  production,  much  of  the  basic  technical 
equipment  has  been  destroyed.  But  while  the  extent 
of  this  physical  destruction  is  not  known  with  any  de- 
gree of  precision,  there  is  no  doubt  that  a  considerable 
part  of  the  technical  equipment  of  the  Russian  indus- 
tries can  still  be  operated,  in  most  cases,  of  course, 
after  more  or  less  serious  rehabilitation  and  repair. 
The  main  difficulty  is  with  the  human  element,  both  in 
labor  and  in  management.  Under  Communism,  the 
Russian  industries  have  become  practically  stripped 
of  their  manpower.  The  Soviet  regime  can  find  no 
means  to  bring  back  this  human  element.  The  direct- 
ing personnel  is  either  abroad,  or  in  hiding,  or  pas- 
sively resistant  through  refusal  to  give  good  work. 
A  very  large  part  of  the  rank  and  file  of  labor  has  fled 
to  the  rural  districts  in  search  for  food,  No  measures 
of  militarized  compulsion  have  been  found  effective  to 
force  them  to  return  to  work. 

From  the  point  of  view  of  the  Soviet  regime  and 
the  problems  that  confront  it,  this  disappearance  of  the 
human  element  in  production  is  disastrous.  The  inabil- 
ity on  the  part  of  the  Soviet  regime  to  overcome  this 
difficulty  renders  futile  all  the  rest  of  the  work  it  at- 
tempts to  do.  The  alternative  to  a  further  develop- 
ment of  this  disastrous  situation  is  the  giving  up  of 
the  principles  of  Communism. 

But  from  the  point  of  view  of  Russia's  economic  fu- 
ture, the  fact  of  the  flight  of  the  workmen  to  rural 
districts  holds  no  particular  terror.  On  the  contrary, 
in  a  sense,  it  is  a  favorable  circumstance.     Life  in  the 


SUMMARY  OF  THE  SITUATION  305 

Russian  cities  under  the  rule  of  Communism  has  be- 
come one  continuous  nightmare  of  terror,  oppression, 
and  privations,  which  stupefy  and  demoralize  the  vic- 
tims of  this  regime.  The  workmen  who  have  fled  to 
the  rural  districts  will  escape  a  considerable  part  of  this 
demoralization,  as  well  as  preserve  their  physical  health 
better  than  they  could  have  done  in  the  cities.  All 
these  workmen  will  return  to  the  industrial  centers, 
when  life  there  becomes  bearable  again.  And  when 
they  return,  they  will  be  better  fitted  for  the  stupendous 
tasks  of  reconstructive  toil  which  will  confront  them 
after  the  years  of  wasteful  saturnalia,  than  their  fellows 
who  had  been  forced  to  remain  in  the  cities. 

Another  circumstance,  while  constituting  a  glaring 
discrepancy  of  the  Soviet  regime,  is  also  a  favorable 
factor  of  the  future  reconstruction;  it  is  the  inability 
of  the  Soviet  regime  to  break  up  the  producers'  coopera- 
tive organizations.  Large-scale  production  in  Russia, 
disorganized  and  thrown  out  of  gear  by  the  experiment 
in  Communism,  will  require  some  time  to  be  fully  oper- 
ative again.  But  the  small-scale,  ''kustar"  production, 
carried  on  mostly  on  a  cooperative  basis,  can  be  avail- 
able all  the  time.  Under  Communism,  the  cooperative 
production  is  subjected  to  numberless  stages  of  control 
which  stunt  its  growth.  After  Communism,  it  can 
blossom  out  and,  at  least  temporarily,  fill  the  gap  left 
by  the  disorganization  of  large-scale  production. 

Finally,  in  agricultural  production,  the  helplessness 
of  the  Soviet  regime  in  foisting  upon  the  peasants  the 
forms  of  the  agrarian  and  agricultural  arrangements 
which  are  required  by  at  least  the  minimum  of  the 
Communistic    theory,    is    quite    patent.     Left    undis- 


306  ECONOMICS  OF  COMMUNISM 

tiirbed  in  their  possession  of  the  land  and  given  a  free 
market  for  their  products,  the  peasants  will  soon  enough 
be  able  to  turn  to  account  the  resources  in  their  pos- 
session. 

Thus  the  three  huge  stumbling  blocks  in  the  path  of 
the  Communistic  experiment,  viz.,  the  inability  of  the 
Soviet  regime  to  maintain  living  standards  for  labor 
and  to  keep  it  at  work;  its  failure  to  break  up  small- 
scale  production ;  and  its  helplessness  in  the  face  of  the 
peasant  opposition,  are  really  the  keystones  of  Russia's 
future  economic  reconstruction. 

Russia's  economic  resources  are  so  vast,  that  even  the 
destruction  wrought  by  the  experiment  in  Communism 
can  be  made  up  in  a  comparatively  short  time.  But 
before  this  process  of  repairment  can  set  in,  one  of  two 
things  must  happen :  either  the  Soviet  regime  will  give 
up  its  Communism  in  the  processes  of  production  and 
distribution,  or  else  it  will  be  overthrown.  Since  the 
Soviet  regime  must  admittedly  lose  its  identity  and  rap- 
idly disintegrate  if  it  should  give  up  such  potent  and 
indispensable  instruments  of  Communism  as  the  terror 
and  economic  compulsion,  the  first  alternative  is,  in  the 
final  analysis,  the  same  as  the  second. 

So  far,  Russia's  experiment  in  the  economics  of  Com- 
munism has  demonstrated  primarily  two  things.  The 
first  is  that  a  deliberate  stimulation  of  the  disintegra- 
tion of  productive  relationships  is  bound  to  induce  in 
the  human  element  of  production  a  negative  attitude 
towards  the  fundamental  processes  of  economic  pro- 
duction. This  cannot  but  result  in  a  progressive  de- 
crease of  production  and  a  constantly  growing  impair- 
ment  of   productive    forces.     The    second    is    that   no 


SUMMARY  OF  THE  SITUATION  307 

amount  of  meciianical  regulation  and  physical  com- 
pulsion can  take  the  place  of  a  positive  attitude  towards 
production  and  of  lost  productive  forces.  The  experi- 
ment and  the  regime  which  is  responsible  for  it  show 
unmistakable  signs  of  their  approaching  liquidation. 
It  is  for  the  process  of  economic  reconstruction  that  is 
bound  to  come  in  the  wake  of  this  liquidation,  to  demon- 
strate to  the  world,  panting  in  its  ovni  huge  efforts  of 
economic  reconstruction,  that  even  out  of  ruin  and 
despair  an  economic  structure  can  be  reared,  founded 
upon  work  and  cemented  with  social  justice — provided 
that  human  life  and  human  freedom  are  not  sacrificed 
to  unscrupulous  gi-eed  or  crushing,  dead  dogma. 


APPENDIX 
I.     LIST  OF  UNFAMILIAK  TEEMS 

Agricultural  Association — a  group  of  peasants,  banded 
together  for  collective  tilling  of  land,  on  the  basis 
of  collective  effort,  but  individual  O'wnership  of  the 
means  of  production. 

Agricultural  Collective — any  gi'oup  of  peasants,  banded 
together  for  collective  tilling  of  land;  cf.  "Agricul- 
tural Association,"  "Kural  Commune." 

Artel — a  gi'oup  of  workmen,  undertaking  to  do  a  given 
piece  of  v^ork  for  stipulated  compensation,  which  is 
then  divided  among  the  members  of  the  group. 

Center — a  department  of  the  Supreme  Council  of  N'a- 
tional  Economy. 

Central  Executive  Committee — the  executive  body  of 
the  Congress  of  Soviets,  acting  as  the  legislative  body 
for  Soviet  Russia  in  the  intervals  between  the  meet- 
ings of  the  Congress. 

Centrosoyuz — formerly,  a  contraction  for  the  name  of 
the  central  executive  body  of  the  consumers'  coop- 
erative organizations;  under  the  Soviet  regime,  the 
administrative  organ  of  the  cooperative  movement, 
reorganized  as  a  part  of  the  Soviet  Government. 

Collegium — an  administrative  committee  for  the  man- 
agement of  an  institution  of  Government  or  a  nation- 
alized enterprise. 

309 


310  APPENDIX 

Committee  of  Poverty — an  administrative  body  in  a 
village  community,  elected  by  the  poorer  elements 
of  the  population ;  cf.  "village  poverty." 

Council  of  National  Economy — local,  the  administra- 
tive organ  for  the  nationalized  industrial  enterprises 
of  a  given  territory;  Supreme,  the  central  adminis- 
trative organ  for  the  whole  system  of  nationalized 
industry  of  Soviet  Kussia. 

Council  of  People's  Commissaries — the  cabinet  of  min- 
isters under  the  Soviet  regime. 

Extraordinary  Commission — commission  created  for  a 
special  task,  e.  g.,  to  combat  sabotage  and  counter- 
revolution, to  promote  work  of  railroad  repair,  etc. 

Factory  Committee— groui^,  elected  by  workmen  in  each 
factory;  at  the  beginning  of  the  Soviet  regime,  to 
manage  the  f actoiy ;  later  on,  to  act  as  the  local  organ 
of  the  trade  unions. 

Fixed  Prices — ^terms  of  purchase  or  sale  set  by  the  Gov- 
ernment. 

Free  Market — system  of  private  trade,  or  place  where 
private  trade  is  carried  on ;  as  compared  with  trade, 
monopolized  by  the  Government. 

Free  Prices — terms  of  purchase  or  sale  prevailing  on 
the  free  market. 

Glavhi — departments  of  the  Supreme  Council  of  N^a- 
tional  Economy. 

Glavlcohratia — term,  denoting  inefficiency  in  industrial 

management. 
Gomza' — abbreviated  name  of  the  State  Association  of 
Metallurgical  Works,  a  gi-oup  of  the  largest  foundries 
in  Russia,  nationalized  by  the  Soviet  Government. 


APPENDIX  311 

Government — name  used  for  a  territorial  division  of 
Russia,  similar  to  a  province. 

Kulak — literally,  "a  fist" ;  name  applied  to  the  more 
prosperous  class  of  tlie  peasantry. 

Kust — name  given  to  a  group  of  nationalized  enter- 
prises in  the  same  branch  of  industry  within  a  given 
territory. 

Kustar — small-scale  home  production  of  simple  manu- 
factured articles. 

Labor  Army — a  body  of  men  placed  in  conditions  of 
military  discipline,  but  used  for  work  in  agriculture, 
industry,  or  any  other  branch  of  economic  life  at  the 
discretion  of  the  Government. 

Labor  Deserter — any  person  who  refuses  to  perform 
set  duty  in  a  labor  army. 

Middle  Peasantry — name  given  to  the  bulk  of  the  peas- 
ant population,  occupying  a  stratum  between  the 
richer  and  the  poorer  classes;  cf.  "kulak"  and  "vil- 
lage poverty." 

Militarization  of  Labor — a  system,  under  which  the 
whole  labor  supply  of  a  country  is  placed  under  the 
complete  control  of  the  state,  in  precisely  the  same 
way  as  an  army. 

Nationalization — a  system,  under  which  the  state  takes 
over,  for  purposes  of  ownership  and  management, 
factories,  banks,  stores,  etc. 

Open  Market — see  "Free  Market." 

Premium — extra  compensation  offered  in  industry  to 
workmen  or  managers  for  increased  productivity. 

Rural  Commune — a  group  of  peasants,  banded  together 


312 


APPENDIX 


for  collective  tilling  of  land,  on  the  basis  of  collective 
ownership  of  all  tools,  livestock,  etc. 

Sabotage — refusal  to  perform  the  work  assigned,  or  de- 
liberate slowing  down  of  work. 

Soviet — a  council  of  any  kind. 

Soviet  Estate — a  piece  of  ground,  owned  by  the  Soviet 
Government,  worked  by  employed  labor  and  admin- 
istered by  a  Government  official. 

SpeJculyatsia — clandestine  private  trade,  on  a  profiteer- 
ing basis. 

Village  Poverty — name  given  in  the  Communist  ter- 
minology to  the  economically  lowest  stratum  of  the 
peasantry. 


II.     EQUIVALENTS  OF  WEIGHTS  AND 
MEASURES. 


Poud — 36.11     lbs.     avoir- 
dupois. 
Verst — .66  mile. 
Sazhen — 7  feet. 
Arshin — .77  yard. 
Desiatina — 2.7  acres. 


Cu.  sazhen — 2.68  cords. 
Rouble — 52  cents  (normal 

exchange) . 
Copeck — one-hundredth  of 

a  rouble. 


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